Rural/Urban Differences in Inpatient Related Costs and Use Among Medicare Beneficiaries

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Background

A recent Institute of Medicine report suggests that care received after a hospitalization is a primary driver of regional variation in health care costs in the United States. 1 While evidence suggests that health care utilization varies by rural setting, 2 it is unknown how pre- and post-hospital admission costs and use differ between Medicare beneficiaries admitted to rural and urban hospitals. For example, those discharged from urban hospitals may be more likely to receive post-acute care from specialists or other more expensive providers, while those discharged from a rural hospital may not have access to specialist care, or they may use less follow-up care. There is also mixed evidence regarding potential differences in readmission rates in rural and urban settings. To better understand the differences in patient cost, use, and quality of care, this brief examines two research questions on overall Medicare utilization: 1) Do Medicare beneficiary admission costs (including pre- admission and post-admission) vary by rurality of the hospital and beneficiary residence and 2) Do 30-day and 60-day readmission rates vary by rurality of the admitting hospital and beneficiary residence?

Methods

This study used the Medicare Current Beneficiary Survey, 2000 to 2009, Cost and Use files. Part A and Part B payments come from Medicare claims; beneficiary cost sharing is not included. Part A makes direct payments from Medicare for inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. Part B payments are for doctors’ fees, outpatient care, medical supplies, and other medical services. The location for hospitals and beneficiaries was determined by Rural Urban Commuting Area (RUCA) codes: 3 Urban, Large Rural, Small Rural, and Isolated Rural. Observations were limited to admissions among beneficiaries who were alive at the end of the survey year, were continuously enrolled in Medicare Part B, did not have end-stage renal disease, took place within the 48 contiguous states, and had a valid ZIP code to match a RUCA code. Inpatient, outpatient, and carrier files were used to determine all payments seven days before and 60 days after an inpatient admission.

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