Medicare post-acute care episodes and payment bundling.

BACKGROUND The purpose of this paper is to examine service use in an episode of acute and post-acute care (PAC) under alternative episode definitions and to look at geographic differences in episode payments. DATA AND METHODS The data source for these analyses was a Medicare claims file for 30 percent of beneficiaries with an acute hospital initiated episode in 2008 (N = 1,705,794, of which 38.7 percent went on to use PAC). Fixed length episodes of 30, 60, and 90 days were examined. Analyses examined differences in definitions allowing any claim within the fixed length period to be part of the episode versus prorating a claim extending past the episode endpoint. Readmissions were also examined as an episode endpoint. Payments were standardized to allow for comparison of episode payments per acute hospital discharge or PAC user across states. RESULTS The results of these analyses provide information on the composition of service use under different episode definitions and highlight considerations for providers and payers testing different alternatives for bundled payment.