Objective: To determine the incidence, cost, and payment for intensive care unit services among Medicare beneficiaries.
Design: Retrospective observational database cohort study.
Setting: All nonfederal hospitals with intensive care unit beds (n = 5003) paid through the inpatient prospective payment system (IPPS).
Patients: We used all fiscal year 2000 Medicare IPPS hospitalizations with consistent payment information (n = 10,657,587).
Interventions: None.
Measurements and main results: We examined the distribution of cost and payments overall, by hospital type, and by diagnosis related group. Intensive care was used in 2,353,208 cases (21.1%). The overall incidence was 59.8 cases per thousand beneficiaries in the aged (65+) population, increasing with age from 36.2 (65-69) to 91.6 (85+). Intensive care unit patients cost nearly three times floor patients (4,135 dollars vs. 5,571 dollars), with two thirds of costs associated with the intensive care unit portion of the stay, 2,278 dollars per intensive care unit day. However, intensive care unit cases were paid at a rate only twice floor cases (11,704 dollars vs. 5,835 dollars). Only 83% of costs were paid for intensive care unit patients, compared with 105% for floor patients, generating a 5.8 billion dollars loss to hospitals when intensive care unit care is required. There was a linear association between the percent intensive care unit in a diagnosis related group and the percent paid, with payment >90% of cost only in diagnosis related groups with >/=60% intensive care unit cases. We found that teaching hospitals were better paid than nonteaching hospitals (87% vs. 78% of costs, respectively), but this was only due to indirect medical education payments.
Conclusions: Intensive care is common, expensive, and poorly paid in the Medicare population. Few diagnosis related groups have a large enough intensive care unit population to ensure adequate payment. Additional diagnosis related groups for conditions common to the intensive care unit would improve payment and enable incentives for efficiency.