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August 14, 2017

Study: Low-income Medicare beneficiaries might incur greater out-of-pocket hospital costs

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    Medicare beneficiaries with lower incomes are more likely than their higher income counterparts to have higher out-of-pocket costs for hospital care because lower-income beneficiaries are more likely stay in hospitals under observation status, according to a study recently published in the American Journal of Medicine, Becker's Hospital CFO Report reports.

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    Study details

    For the study, researchers looked at the association between Medicare beneficiaries' incomes and their utilization of observation stays—which are not fully covered by Medicare and carry a one-time out-of-pocket fee—as well as the beneficiaries' financial liability for observation care. The researchers analyzed 2013 data from the U.S. Census Bureau and Medicare Part B claims, which included 67,000 beneficiaries who had more than 132,000 observation stays.


    The researchers found that the lowest-income Medicare beneficiaries had more observation stays than Medicare beneficiaries with higher incomes. Compared with the highest-income Medicare beneficiaries, the lowest-income beneficiaries were 24 percent more likely to be hospitalized for at least three observation stays annually, according to the study.

    Further, the researchers found that the risk of incurring high out-of-pocket costs for observation stays was lowest among the 25 percent of Medicare beneficiaries with the highest incomes.


    Jennifer Goldstein, the study's lead author and a researcher with Christiana Care Hospitalist Partners and Sidney Kimmel Medical College, said, "We know from prior work that multiple observation stays can lead to high out-of-pocket costs for Medicare beneficiaries," but "[t]o our knowledge, this is the first nationally representative study to find that beneficiaries who are least able to afford it may be at greatest risk for incurring these high costs. 

    Kumar Dharmarajan, a researcher at Yale University School of Medicine who was not involved in the study, said, "While it makes sense that the higher use of observation stays for persons with lower socioeconomic status is associated with higher charges, it is likely that much of these higher costs would be covered by Medicaid." He added, "After accounting for Medicaid contributions, it is actually conceivable that persons with low socioeconomic status actually have lower total out-of-pocket payments."

    Ann Sheehy, a researcher at the University of Wisconsin School of Medicine and Public Health in Madison who was not involved in the study, said the findings shed light on the differences between observation and inpatient hospital stays, which some beneficiaries might not understand. She said more research is needed, noting that "[n]o study to date has been able to compare cost of inpatient to (observation) stays for the exact same set of services and hospital length of stay, and none have been able to account for all costs a patient may incur" (Rapaport, Reuters, 8/9; Rappleye, Becker's Hospital CFO Report, 8/10; Goldstein et al., American Journal of Medicine, 7/31).

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    Join us on Thursday, August 24 to learn about CMS's finalized updates to hospital inpatient payment rates, the three mandatory pay-for-performance programs, and inpatient quality reporting.

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