Medicaid nursing facility reimbursement methods: 1979-1997

Smoke without Fire: Nursing Facility Closures in California, 1997–2001

This paper draws from a rich longitudinal California data set to analyze the scope and nature of nursing home closures between 1997 and 2001, and to present a Cox proportionate hazards model of the risks of closure that arise from a range of facility and market characteristics. When compared with the sample total of 1,482 facilities operating in the baseline year of 1997, only 56 facilities closed through 2001, involving the loss of 3.8% of facilities and 2,915 beds (2.3%). The multivariate Cox model of factors associated with closure reports that: 1) hospital-based facilities are 600% more likely to close than are free-standing homes; 2) reducing bed size by one standard deviation (52 beds) increases the risk of closure by 460%; 3) facilities with losses of 5% or worse are more than twice as likely to close; and 4) a one-standard deviation increase in the spare bed capacity measure of county competition raises the risk of facility closure by 140%.

Medicaid Nursing Facility Utilization

This study uses a longitudinal California data set (1995 to 2000) to address two concerns about Medicaid nursing facility (NF) utilization. First, to consider the impact of national cost-control policies, the authors analyze data trends in Medicaid NF participants, days of care, and expenditures. Second, the authors investigate the percentage of Medicaid days of care (%MDOC) using a panel regression model to consider resident, facility, and county market predictors. The findings show that although statewide Medicaid NF participants, expenditures, and%MDOC remain stable, Medicaid market segmentation persistes, with program participants distributed unevenly among facilities. Factors associated positively with facility%MDOC are the proportion of minority residents, a larger facility size, for-profit status, the percentage of aged Black persons in the county, and market concentration. The factors associated negatively with%MDOC are the percentages of resident men, residents aged 85 or older, residents with Alzheimer’s disease, Medicaid reimbursement rates, and county wealth.

Bureaucratic Policy Making on Trial: Medicaid Nursing Facility Reimbursement, 1988-1998

Few systematically assess the determinants of Medicaid nursing facility reimbursement. Consequently, this article examines what factors influenceprogram administrators’decisions regarding nursing facility cost report data—the basic information states use to establish payment. Whereas elected officials focus primarily on how much is spent on nursing homes, state Medicaid officials assume primary responsibility for the esoteric and highly technical dimensions that help make spending goals a reality. Findings indicate that the federal government influenced state policy by enabling provider litigation under the Boren Amendment. They also indicate that program administrators responded rationally to fiscal and economic concerns, and that states with stronger administrative capacity were better able to overcome obstacles to sustaining desired policies. Although results reveal that states with more powerful nursing home lobbies tended to implement more generous systems, they fail to reveal significant associations between cost report year and lobbying activity on behalf of the elderly.

The Impact of Certificate-of-Need Laws on Nursing Home and Home Health Care Expenditures

Over the past two decades, nursing homes and home health care agencies have been influenced by several Medicare and Medicaid policy changes including the adoption of prospective payment for Medicare-paid postacute care and Medicaid-paid long-term home and community-based care reforms. This article examines how spending growth in these sectors was affected by state certificate-of-need (CON) laws, which were designed to limit the growth of providers and have remained unchanged for several decades. Compared with states without CON laws, Medicare and Medicaid spending in states with CON laws grew faster for nursing home care and more slowly for home health care. In particular, we observed the slowest growth in community-based care in states with CON for both the nursing home and home health industries. Thus, controlling for other factors, public postacute and long-term care expenditures in CON states have become dominated by nursing homes.

Why do nursing homes close? An analysis of newspaper articles

Using Non-numerical Unstructured Data Indexing Searching and Theorizing (NUD'IST) software to extract and examine keywords from text, the authors explored the phenomenon of nursing home closure through an analysis of 30 major-market newspapers over a period of 66 months (January 1, 1999 to June 1, 2005). Newspaper articles typically represent a careful analysis of staff impressions via interviews, managerial perspectives, and financial records review. There is a current reliance on the synthesis of information from large regulatory databases such as the Online Survey Certification And Reporting database, the California Office of Statewide Healthcare Planning and Development database, and Area Resource Files. Although such databases permit the construction of studies capable of revealing some reasons for nursing home closure, they are hampered by the confines of the data entered. Using our analysis of newspaper articles, the authors are able to add further to their understanding of nursing home closures.

Medicaid nursing facility rates, capacity, and utilization: a structural analysis

This analysis extends earlier work using national data to examine Medicaid nursing facility (NF) utilization (participants per aged population) and its interrelationships with Medicaid per diem NF reimbursement rates and NF bed capacity, using state-level data over 19 years to estimate two-stage structural equations. Findings demonstrate complex relationships among these factors. Reimbursement rates showed no demonstrable impact on utilization but positive effects on beds. Beds, in turn, positively predict utilization and negatively predict rates. Findings suggest that policy makers might focus on constraining Medicaid NF costs through controlling bed stock rather than by keeping rates lower, which can have untoward effects on quality and equity.

The devil's in the details: trading policy goals for complexity in medicaid nursing home reimbursement

There is great variability in how much nursing home providers are paid for a day of care for a Medicaid recipient, how the payment level is set, and what mechanisms are used to reimburse facilities. Given the absence of recent, comprehensive in-depth analyses of state reimbursement systems, this article undertakes a comparative case analysis of Medicaid nursing facility reimbursement in Alabama, California, Minnesota, Texas, Washington, and Wisconsin. Findings indicate that states design their methods of reimbursement to achieve desired policy outcomes related to facility cost and quality, access to care, payment equity, service capacity, and budgetary control. The result, however, has been the development of enormously complex and demanding rate-setting methodologies, the adverse consequences of which can outweigh and overwhelm the discrete policy objectives contained in the reimbursement formula. This complexity highlights the potential trade-off between achieving desired goals and costly administrative burdens, opportunities for appeal and disagreement, difficulties understanding the ramifications of system changes, reliance on simplified decision-making rules, and exclusion of otherwise interested parties from the policy process.

Do financial incentives of introducing case mix reimbursement increase feeding tube use in nursing home residents?

OBJECTIVES

To determine whether adoption of Medicaid case mix reimbursement is associated with greater prevalence of feeding tube use in nursing home (NH) residents.

DESIGN

Secondary analysis of longitudinal administrative data about the prevalence of feeding tube insertion and surveys of states' adoption of case mix reimbursement.

SETTING

NHs in the United States.

PARTICIPANTS

NH residents at the time of NH inspection between 1993 and 2004.

MEASUREMENTS

Facility prevalence of feeding tubes reported at the state inspection of NHs reported in the Online Survey, Certification and Reporting database and interviews with state policy makers regarding the adoption of case mix reimbursement.

RESULTS

Between 1993 and 2004, 16 states adopted Resource Utilization Group case mix reimbursement. States varied in the prevalence of feeding tubes in their NHs. Although the use of feeding tube increased substantially over the years of the study, once temporal trends and facility fixed effects were accounted for, case mix reimbursement was not associated with greater prevalence of feeding tube use.

CONCLUSION

The adoption of Medicaid case mix reimbursement was not associated with an increase in the prevalence of feeding tube use.

Restructuring in response to case mix reimbursement in nursing homes: a contingency approach

BACKGROUND

Resident-based case mix reimbursement has become the dominant mechanism for publicly funded nursing home care. In 1998 skilled nursing facility reimbursement changed from cost-based to case mix adjusted payments under the Medicare Prospective Payment System for the costs of all skilled nursing facility care provided to Medicare recipients. In addition, as of 2004, 35 state Medicaid programs had implemented some form of case mix reimbursement.

PURPOSE

The purpose of the study is to determine if the implementation of Medicare and Medicaid case mix reimbursement increased the administrative burden on nursing homes, as evidenced by increased levels of nurses in administrative functions.

METHODOLOGY/APPROACH

The primary data for this study come from the Centers for Medicare and Medicaid Services Online Survey Certification and Reporting database from 1997 through 2004, a national nursing home database containing aggregated facility-level information, including staffing, organizational characteristics and resident conditions, on all Medicare/Medicaid certified nursing facilities in the country. We conducted multivariate regression analyses using a facility fixed-effects model to examine the effects of the implementation of Medicaid case mix reimbursement and Medicare Prospective Payment System on changes in the level of total administrative nurse staffing in nursing homes.

FINDINGS

Both Medicaid case mix reimbursement and Medicare Prospective Payment System increased the level of administrative nurse staffing, on average by 5.5% and 4.0% respectively. However, lack of evidence for a substitution effect suggests that any decline in direct care staffing after the introduction of case mix reimbursement is not attributable to a shift from clinical nursing resources to administrative functions.

PRACTICE IMPLICATIONS

Our findings indicate that the administrative burden posed by case mix reimbursement has resource implications for all freestanding facilities. At the margin, the increased administrative burden imposed by case mix may become a factor influencing a range of decisions, including resident admission and staff hiring.

Nurse staffing levels and Medicaid reimbursement rates in nursing facilities

OBJECTIVE

To examine the relationship between nursing staffing levels in U.S. nursing homes and state Medicaid reimbursement rates.

DATA SOURCES

Facility staffing, characteristics, and case-mix data were from the federal On-Line Survey Certification and Reporting (OSCAR) system and other data were from public sources.

STUDY DESIGN

Ordinary least squares and two-stage least squares regression analyses were used to separately examine the relationship between registered nurse (RN) and total nursing hours in all U.S. nursing homes in 2002, with two endogenous variables: Medicaid reimbursement rates and resident case mix.

PRINCIPAL FINDINGS

RN hours and total nursing hours were endogenous with Medicaid reimbursement rates and resident case mix. As expected, Medicaid nursing home reimbursement rates were positively related to both RN and total nursing hours. Resident case mix was a positive predictor of RN hours and a negative predictor of total nursing hours. Higher state minimum RN staffing standards was a positive predictor of RN and total nursing hours while for-profit facilities and the percent of Medicaid residents were negative predictors.

CONCLUSIONS

To increase staffing levels, average Medicaid reimbursement rates would need to be substantially increased while higher state minimum RN staffing standards is a stronger positive predictor of RN and total nursing hours.

State discretion and medicaid program variation in long-term care: when is enough, enough?

Although federal statutes and regulations establish the broad parameters within which state Medicaid programs operate, the federal government grants states substantial discretion over Medicaid and Medicaid-funded long-term care. An appreciation of resulting cross-state variation in Medicaid program characteristics, however, has been lacking in the ongoing debate over whether the federal government should further devolve responsibility for caring for the poor and disabled elderly to the states. To better inform this discussion, therefore, this article documents considerable variation, not only in terms of Medicaid program spending and recipients, but also in terms of strategies chosen to reform long-term care services and financing. Since there is little doubt that states take full advantage of current levels of discretion, advocates of devolution may want to reassess their views to consider whether existing variation has resulted in inequities addressable only through more, not less, federal involvement.

California nursing facility quality and union environments

OBJECTIVE

Many studies have examined quality effects of nursing facility (NF) staffing, but few have examined effects of unionization. Concerned with possible effects of unionization on quality, we analyzed unionization and local market climate of unionization, predicting both complaints (reflecting either quality problems or better monitoring and advocacy) and the substantiation of serious complaints (indicating major quality problems).

METHOD

Data were analyzed on California freestanding NFs in 1999 (N = 1,155). OLS regression was employed to predict both quality complaints and serious violations, the latter both controlling and not controlling for numbers of complaints.

RESULTS

Unionized NFs showed more complaints than did non-unionized NFs. Non-unionized NFs had more serious violations, particularly when the proportion of other county facilities unionized was higher.

DISCUSSION

These findings suggest that unionization enhances problem reporting while, especially in stronger union environments, reducing the incidence of serious quality violations.

The effect of state medicaid case-mix payment on nursing home resident acuity

OBJECTIVE

To examine the relationship between Medicaid case-mix payment and nursing home resident acuity.

DATA SOURCES

Longitudinal Minimum Data Set (MDS) resident assessments from 1999 to 2002 and Online Survey Certification and Reporting (OSCAR) data from 1996 to 2002, for all freestanding nursing homes in the 48 contiguous U.S. states.

STUDY DESIGN

We used a facility fixed-effects model to examine the effect of introducing state case-mix payment on changes in nursing home case-mix acuity. Facility acuity was measured by aggregating the nursing case-mix index (NCMI) from the MDS using the Resource Utilization Group (Version III) resident classification system, separately for new admits and long-stay residents, and by an OSCAR-derived index combining a range of activity of daily living dependencies and special treatment measures.

DATA COLLECTION/EXTRACTION METHODS

We followed facilities over the study period to create a longitudinal data file based on the MDS and OSCAR, respectively, and linked facilities with longitudinal data on state case-mix payment policies for the same period.

PRINCIPAL FINDINGS

Across three acuity measures and two data sources, we found that states shifting to case-mix payment increased nursing home acuity levels over the study period. Specifically, we observed a 2.5 percent increase in the average acuity of new admits and a 1.3 to 1.4 percent increase in the acuity of long-stay residents, following the introduction of case-mix payment.

CONCLUSIONS

The adoption of case-mix payment increased access to care for higher acuity Medicaid residents.

The Employment of Nurse Practitioners and Physician Assistants in U.S. Nursing Homes

PURPOSE

Nursing facilities with nurse practitioners or physician assistants (NPs or PAs) have been reported to provide better care to residents. Assuming that freestanding nursing homes in urban areas that employ these professionals are making an investment in medical infrastructure, we test the hypotheses that facilities in states with higher Medicaid rates, and those in more competitive markets and markets with higher managed care penetration, are more likely to employ NPs or PAs.

DESIGN AND METHODS

The Online Survey Certification and Reporting System (OSCAR) database, Area Resource File, and information from surveys of state policies from 1993 to 2002 are used to study the employment of NPs or PAs, using a cross-sectional time-series generalized estimating equation model with surveys nested within facilities, testing several market and state-policy effects while controlling for facility and market characteristics.

RESULTS

Throughout the 1990s the proportion of nursing facilities with NPs or PAs doubled, from less than 10% to over 20%. Facilities in states in the upper quartile of Medicaid reimbursement rates were 10% more likely to employ NPs or PAs. Facilities in more competitive markets, and in markets with higher managed care penetration, were more likely to employ NPs or PAs (adjusted odds ratio = 1.27, 1.20 respectively).

IMPLICATIONS

More generous state Medicaid nursing home reimbursement and higher competition may advance the investment in medical infrastructure, which in turn may positively affect the quality of care provided to nursing home residents.

Recent trends in state nursing home payment policies

State Medicaid programs pay for a sizable portion of overall nursing home expenditures. The repeal of the Boren amendment in 1997 gave states greater freedom to set Medicaid nursing home policy. This study presents data from a comprehensive survey of state nursing home payment policies during 1999-2002. Aggregate inflation-adjusted Medicaid payment rates rose steadily, and there was no sizable increase in the adoption of other cost-cutting policies. Although these findings can be interpreted with some optimism from a nursing home financing perspective, areas of concern remain for state nursing home policy during the next several years.

Where does the US experience of managed care currently stand?

After an historical review of the advent of managed care in the USA, this article presents cost-control mechanisms, changes in the medical practice and consequences on patient health. The article also explains the development of the HMO using the transaction costs theory and the subsequent orientations of the US health care system.

Effects of nursing home ownership type and resident payer source on hospitalization for suspected pneumonia

BACKGROUND

Whether to hospitalize residents with suspected pneumonia is a complex decision determined both by clinical and financial considerations. The decision to hospitalize may be different in for-profit and not-for-profit facilities and for different payment sources.

OBJECTIVE

The objective of this study was to examine the role of proprietary status in the decision to hospitalize residents with suspected pneumonia, controlling for facility- and resident-level factors.

DATA AND METHODS

The analysis uses the 1996 Medical Expenditure Panel Survey Nursing Home Component, a nationally representative sample of 5899 nursing home residents in 815 facilities. During the year, 766 elderly residents in the sample were suspected of having pneumonia infections and 224 were hospitalized for them. Logistic regression is used to assess factors affecting the decision to hospitalize among the 766 with pneumonia infections.

MAIN OUTCOME MEASURE

Hospitalization for suspected pneumonia.

RESULTS

Residents with suspected pneumonia in not-for-profit facilities are hospitalized at a rate half that of for-profit facilities. The difference is most pronounced for residents who are older and more cognitively impaired and those who are covered by Medicare or private funds. Medicaid residents are most likely overall to be hospitalized, with higher rates in not-for-profit than for-profit facilities.

CONCLUSION

Risk of hospitalization for suspected pneumonia varies widely by ownership type and resident payer source, with lowest overall risk in not-for-profit facilities. Higher Medicaid hospitalization in not-for-profit facilities is consistent with heterogeneity in the not-for-profit sector, where Medicaid residents are sorted into the lower-quality facilities.

A systems framework for evaluating nursing care quality in nursing homes

Given the ongoing concerns about the quality of care in nursing homes, a theoretical framework to guide a systems approach to quality is important. Existing frameworks either do not model causality, or do so in a linear fashion in which the actual linkages between components of quality may not be well specified. Through a review of frameworks for nursing home quality, and empirical studies on the subject, the authors construct a framework for nursing home quality that links contextual components of quality with structure, structure with process, and process with outcomes, focusing on nursing care quality. Intrastructural relationships and feedback mechanisms are also modeled. The framework is matched with a discussion of multilevel structural equation analysis for statistical application. Future research should expand the framework to include non-nursing components of quality.

Driven to tiers: socioeconomic and racial disparities in the quality of nursing home care

Nursing home care is currently a two-tiered system. The lower tier consists of facilities housing mainly Medicaid residents and, as a result, has very limited resources. The nearly 15 percent of U.S. nonhospital-based nursing homes that serve predominantly Medicaid residents have fewer nurses, lower occupancy rates, and more health-related deficiencies. They are more likely to be terminated from the Medicaid/Medicare program, are disproportionately located in the poorest counties, and are more likely to serve African-American residents than are other facilities. The public reporting of quality indicators, intended to improve quality through market mechanisms, may result in driving poor homes out of business and will disproportionately affect nonwhite residents living in poor communities. This article recommends a proactive policy stance to mitigate these consequences of quality competition.

Nursing home staffing, turnover, and case mix

This study examined the predictors of total nurse and registered nurse (RN) staffing hours per resident day separately in all free-standing California nursing homes (1,555), using staffing data from state cost reports in 1999. This study used a two-stage least squares model, taking into account nursing turnover rates, resident case mix levels, and other factors. As expected, total nurse and RN staffing hours were negatively associated with nurse staff turnover rates and positively associated with resident case mix. Facilities were resource dependent in that a high proportion of Medicare residents predicted higher staffing hours, and a higher proportion of Medicaid residents predicted lower staffing hours and higher turnover rates. Nursing assistant wages were positively associated with total nurse staffing hours. For-profit facilities and high-occupancy rate facilities had lower total nurse and RN staffing hours. Medicaid reimbursement rates and multifacility organizations were positively associated with RN staffing hours.

Designing a report card for nursing facilities: what information is needed and why

PURPOSE

This article presents a rationale and conceptual framework for making comprehensive consumer information about nursing facilities available. Such information can meet the needs of various stakeholder groups, including consumers, family/friends, health professionals, providers, advocates, ombudsman, payers, and policy makers.

DESIGN AND METHODS

The rationale and framework are based on a research literature review of key quality indicators for nursing facilities.

RESULTS

The findings show six key areas for information: (a) facility characteristics and ownership; (b) resident characteristics; (c) staffing indicators; (d) clinical quality indicators; (e) deficiencies, complaints, and enforcement actions; and (f) financial indicators. This information can assist in selecting, monitoring, and contracting with nursing facilities.

IMPLICATIONS

Model information systems can be designed using existing public information, but the information needs to be enhanced with improved data.

The economic implications of case-mix Medicaid reimbursement for nursing home care

In recent years, there has been large growth in the nursing home industry in the use of case-mix adjusted Medicaid payment systems that employ resident characteristics to predict the relative use of resources in setting payment levels. Little attention has been paid to the access and quality incentives that these systems provide in the presence of excess demand conditions due to certificate-of-need (CON) and construction moratoria. Using 1991 to 1998 panel data for all certified U.S. nursing homes, a fixed-effects model indicates that adoption of a case-mix payment system led to increased access for more dependent residents, but the effect was modified in excess demand markets. Quality remained relatively stable with the introduction of case-mix reimbursement, regardless of the presence of excess demand conditions. These results suggest that CON and construction moratoria are still important barriers within the nursing home market, and recent quality assurance activities related to the introduction of case-mix payment systems may have been effective.

State Medicaid nursing home reimbursement rates: adjusting for ancillaries

PURPOSE

State variation in inclusion of ancillary services in daily Medicaid nursing home reimbursement rates, versus covering ancillary costs outside of such rates, makes rate comparisons difficult. The purpose of this study is to adjust for inclusion of ancillaries when comparing Medicaid rates across states.

DESIGN AND METHODS

Data for 1987-1998 were drawn from a national survey of Medicaid reimbursement. Employing a random-effects model, the PANEL option in the LIMDEP software was used to estimate effects on state average Medicaid nursing facility constant-dollar rates of the inclusion in those rates of a set of ancillaries: physical therapy, occupational therapy, prescription drugs, nonprescription drugs, durable medical equipment (DME), medical supplies, and physician services.

RESULTS

Rates averaged higher when they included occupational therapy, physician services, nonprescription drugs, and both DME and medical supplies. Adjusting for the inclusion of ancillaries leads to a much different ranking of states than for unadjusted rates.

IMPLICATIONS

Public and industry policy makers should consider the inclusion of ancillaries in rates when considering the relative adequacy of rates across states.