Medicare Payment Policy

Beneficiaries’ access to care: Access
remained positive, as hospital capacity
generally grew over the period reviewed
We assess beneficiaries’ access to care by tracking
the number of hospitals participating in the Medicare
program, the proportions of hospitals offering certain
specialty services, and the volume of services received. In
general, we find that access to hospital services is good
and has expanded from the previous year.
More hospitals opened than closed
In 2011, 18 ACHs opened and 8 closed (Figure 3-1). For
the 10th consecutive year, hospital openings exceeded
closings. 1 Overall, approximately 4,800 short-term ACHs
participated in the Medicare program in 2011. Of them,
1,329 were CAHs (Flex Monitoring Team 2012).
Hospitals that entered the Medicare program in 2011 were
generally the same size as those that left the program.
The 18 hospitals that entered the program in 2011 had 98
beds on average, representing approximately 1,800 new
acute care beds. All but two of these hospitals opened in
urban areas, and slightly more than half were nonprofit
hospitals. Four of the hospitals that entered the program
opened in Florida, three opened in California, and the
remaining hospitals were dispersed across the country. In
earlier years, many new entrants appeared to be specialty
hospitals, but in 2011 most were small or midsized
hospitals offering a slightly broader range of services.
This shift reflects the new rules enacted in 2010 as part
of the Patient Protection and Affordable Care Act of 2010
(PPACA), which prohibited physicians from referring
patients to new physician-owned hospitals in which they
were investors.
The eight hospitals that exited the program in 2011 were
similar in size and geographic location. With an average
size of 85 beds, the exit of these hospitals amounted to
roughly 700 closed acute care beds. Six closures occurred
in urban locations and two in rural locations. For most of
these facilities, we observed a decline in their total (allpayer)
margins over each of the last three years, which
were less than –10 percent in one or more of the years
between 2008 and 2010. These hospitals had an average
inpatient occupancy rate of 37 percent, significantly
lower than the national average of approximately 60
percent. Although the shares of Medicaid patients varied
across each of these hospitals over their last three years
of service, their share of Medicaid inpatient admissions
generally increased. In addition, hospitals that closed were
FIguRe FIGURE
Cumulative percent change
3–2 3-2
40
35
30
25
20
15
10
5
0
-5
-10
2004
Medicare outpatient services grew
Medicare inpatient discharges per
while hospital inpatient discharges....
beneficiary declined as outpatient
visits per beneficiary increased
Outpatient services
per FFS Part B beneficiary
Inpatient discharges
per FFS Part A beneficiary
2005
2006
2007
2008
2009
2010
Note: FFS (fee-for-service). Data include general and surgical hospitals, critical
access, and children’s hospitals.
Source: Medicare hospital cost reports and Medicare outpatient claims data.
Note: Note and Source in InDesign.
Year
33.6
–7.8
2011
located an average of six miles from the nearest hospital,
and the average occupancy rate of that hospital was
typically 15 to 20 percentage points higher.
Volume of services: Inpatient declines as
outpatient grows
The shift of services from the inpatient to the outpatient
setting continued in 2011. To examine changes in volume
in the two settings, we used the number of admissions
per FFS beneficiary as an indicator of inpatient volume
and the number of services per beneficiary to measure
outpatient volume. In 2011, Medicare inpatient admissions
per FFS beneficiary declined 1.3 percent per Part A
beneficiary and had a cumulative reduction of 7.8 percent
from 2004 to 2011 (Figure 3-2). 2 Notes about this graph:
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default when you change the data.
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The decline in inpatient
admissions occurred while outpatient volume increased
by 4.4 percent per Part B beneficiary from 2010 to 2011
and by 33.6 percent cumulatively from 2004 to 2011.
This shift in the site of service from inpatient to outpatient
settings occurred across all types of insurance (American
Hospital Association 2011). In particular, surgeries shifted
from inpatient to outpatient settings. From 2010 to 2011,
Report to the Congress: Medicare Payment Policy | March 2013
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