While higher inpatient spending in Massachusetts has been linked to rising prices and acuity levels, the Massachusetts Health Policy Commission reinforced its findings that state residents may not actually be getting sicker.
Despite a nearly 14% decline in commercial inpatient utilization from 2013 to 2018, inpatient spending grew about 11%, according to the commission's annual cost trends report. Higher prices and acuity inflated spending, the commission's analysis of quality metrics and coding frequency shows.
Inpatient acuity grew more than 10% over that span while length of stay only inched up 1.5% and intensive and critical care days fell almost 10%. Commissioner David Cutler said this puzzled him during Tuesday's board meeting.
When the commission polled payers and providers about that trend, they attributed it to the aging population, better EHRs that improved documentation, coding integrity initiatives and the increasing burden of chronic disease. But aging only explains a fraction of the 11.7% increase in commercial member risk scores from 2013 to 2018. A shift in the prevalence of chronic diseases in certain populations and decline in others essentially offsets itself, Cutler said.
"Life expectancy doesn't grow over this time period, so there is nothing we can find that suggests we are getting sicker as a state," he said.
The commission's preliminary report pointed to higher coding severity for chronic obstructive pulmonary disease. Its final report highlighted a 180% increase from 2010 to 2018 in inpatient discharges associated with septicemia, or blood poisoning. But the number of inpatient discharges associated with conditions that often lead to septicemia—pneumonia, fever, respiratory and gastrointestinal infections, cellulitis and urinary tract infections—decreased 14% to 19% over that span.
When the commission asked researchers about analyzing septicemia trends, they said they use clinical rather than administrative data because there is so much coding of septicemia that is more on the margin and subjective.
"Coders have latched onto this," said Laura Nasuti, an associate director at the commission. "There are coding blogs and groups that help promote the coding of septicemia, which if it is true septicemia and it is early detection that is great, but unfortunately we see here that there is financial incentive to be aggressively coding septicemia."
The average payment for pneumonia commercial claims is around $12,000 compared to $23,000 for septicemia, Nasuti added.
Both Partners HealthCare and Beth Israel Lahey Health, the two largest health systems in the state, cited "new or improved EHRs that have increased your ability to document diagnostic information" as a major factor in rising acuity levels and risk scores. The Massachusetts Health & Hospital Association echoed that sentiment in a statement.
Industry observers and health systems executives have said a decrease in length of stay and ICU utilization could indicate that hospitals are becoming more efficient and savvy in their treatment plans; higher acuity levels reflect better documentation, tools and assessment of complex patients. Skeptics argue that hospitals are improperly gaming the system to maximize revenue.
Health insurers have perfected a way to wring billions more in revenue from the Medicare program by adding diagnosis codes and increasing risk-adjustment payment, which is legal if the documentation supports it. Hospitals also have the right to "take full advantage of coding opportunities to maximize Medicare payment that is supported by documentation in the medical record," according to a recent ruling.
Meanwhile, hospitals are the biggest drivers of the $3.6 trillion healthcare system, accounting for around a third of total spending. Hospitals continue to consolidate, including Partners and Beth Israel Lahey, which has been linked to higher prices and lower quality.
The commission found that annual risk-adjusted medical spending was $1,500, or 33% higher, for patients treated by Partners physicians—the highest-cost provider in the state—compared with the lowest-cost Atrius Health.
Part of that is related to the persistence of unnecessary or low-value treatment. On average, more than 1 in 4 hospital patients received unnecessary pre-operative tests, the commission's data show.
Rising hospital spending is disproportionately affecting lower-income individuals. Nearly 40 cents of every additional dollar earned by Massachusetts families between 2016 and 2018 went to healthcare, while wages have hardly kept up with inflation. Also, the annual Massachusetts employee premium contribution for low-wage employees ($8,196) is significantly greater than higher-wage employees ($5,377), according to the commission.
