Charges for outpatient rehabilitation: Growth and differences in provider types

Abstract

Objective: This study compares Medicare program charges through time for outpatient rehabilitation services across different types of institutional providers. Design: Observational study of Medicare Part B claims. The analytic methods include a decomposition analysis and analysis of variance via regression. Setting: Data come from six different institutional provider types: community hospital outpatient departments, rehabilitation hospital outpatient departments, skilled nursing facilities, independent rehabilitation agencies, comprehensive outpatient rehabilitation facilities, and home health agencies. Patients: Five percent random sample of Medicare beneficiaries who used any institutionally based Part B physical, occupational, or speech therapy during the calendar years 1987 to 1990. Main Outcome Measure: Charges for Medicare Part B rehabilitation therapies (physical and occupational therapy, speech pathology). Results: Charges for rehabilitation services grew more than 86% during this period across all provider types. Both the likelihood of using rehabilitation services and the average annual charges per patient grew rapidly. We found large differences in average annual per person charges and in the growth in charges across the six institutional provider types. Analyses that controlled for patient demographic characteristics and diagnoses across five provider types did not explain observed differences. Hospital outpatient departments were consistently the least costly type of institutional provider and independent rehabilitation agencies the most expensive. Diagnostic data were not available for home health agency claims, so these were omitted from the multivariate analysis of annual charges. Conclusions: The large increases in charges cannot be explained by increases in the Medicare eligible population, aging, or inflation. The level and differential in growth is highest among new provider types and those dominated by proprietary ownership. These observations suggest that therapy services are profitable and that provider incentives may be an important component in overall growth.