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

The Effects of Certificate-of-Need Laws on the Quality of Hospital Medical Services

Certificate-of-need (CON) laws restrict entry into health services by requiring healthcare providers to seek approval from state healthcare regulators before making any major capital expenditures. An important question is whether CON laws influence the quality of medical services in CON law states. For instance, if CON laws actually lower the quality of medical services, they fail to achieve their intended effect. This paper tests the hypothesis that hospitals in states with CON laws provide lower-quality services than hospitals in states without CON laws. Our overall results suggest that CON regulations lead to lower-quality care for some quality measures and have little or no effect on other quality standards. The results remain consistent across several robustness tests.

Putting the Nursing and Home in Nursing Homes

As the late Robert Kane observed, the term nursing home is often a misnomer. Most U.S. nursing homes lack adequate nursing staff, and they are typically not very homelike in either their physical structure or culture. These problems were magnified during the pandemic. The underlying reasons for these longstanding issues are that most state Medicaid payment systems reimburse nursing homes at a relatively low level and the government does not hold nursing homes accountable for spending dollars on direct resident care. To encourage increased staffing and more homelike models of care, policymakers need to reform how nursing homes are paid and hold facilities accountable for how they spend government dollars. With these reforms, the term nursing home will become more appropriate in the United States.

Skilled Nursing Facility Organizational Characteristics Are More Strongly Associated With Multiparticipant Therapy Provision Than Patient Characteristics

OBJECTIVES

Multiparticipant physical and occupational therapy provision has fluctuated significantly in skilled nursing facilities (SNFs) under shifts in Medicare reimbursement policy. Multiparticipant therapy includes group (2-6 individuals per therapist) and concurrent therapy (2 individuals per therapist). This study uses recent patient-level data to characterize multiparticipant therapy provision in SNFs to help anticipate shifts under new Medicare policy and the COVID-19 pandemic.

METHODS

This secondary analysis used data on 1,016,984 post-acute rehabilitation stays in SNFs in 2018. This analysis identified patient predictors (eg, demographic, clinical) and organizational predictors (eg, ownership, quality, staffing) of receiving multiparticipant therapy using mixed-effects logistic regression. Among individuals who received any multiparticipant therapy, those patient or facility factors associated with high rates of multiparticipant therapy provision were also determined.

RESULTS

Less than 3% of individuals received multiparticipant therapy in 2018. Patient functional and cognitive impairment and indicators of market regulation were associated with lower odds of multiparticipant therapy. Effect sizes for organizational factors associated with multiparticipant therapy provision were generally larger compared with patient factors. High multiparticipant therapy provision was concentrated in <2% of SNFs and was positively associated with for-profit ownership, contract staffing, and low 5-star quality ratings.

CONCLUSION

SNF organizational characteristics tended to have stronger associations with multiparticipant therapy provision than patient factors, suggesting that changes in patient case-mix, as expected during the COVID-19 pandemic, may have less of an impact on multiparticipant therapy provision than organizational factors. Results suggest that for-profit SNFs in states with higher market regulation, SNFs providing high volumes of therapy, and SNFs utilizing high proportions of assistants and contract staff may be more responsive to Medicare policy by increasing multiparticipant therapy provision.

IMPACT

This study may help identify SNFs that are more likely to increase multiparticipant therapy provision under new Medicare payment policy.

Early Acceleration of COVID-19 in Areas with Larger Nursing Homes and Certificate of Need Laws

BACKGROUND

Severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) outbreaks have become common in large nursing homes, placing not only residents but also staff and community members at risk for infection. However, the relationship between larger nursing homes and the community spread of SARS-CoV-2 has not yet been documented.

OBJECTIVE

To examine the association between county average nursing home bed size and presence of certificate of need (CON) laws, which influence nursing home size, with county-level SARS-CoV-2 prevalence over time.

DESIGN

Cross-sectional study using county-level data from March 11 through June 12, 2020.

PARTICIPANTS

All US counties with at least one nursing home (n = 2,883).

MAIN MEASURES

The main explanatory variables were county average nursing home bed size and presence of a CON law. The main outcome was the cumulative number of SARS-CoV-2 cases on each day of the study period adjusted for county population size and density, demographic and socioeconomic characteristics, total nursing home bed supply, other health care supply measures, epidemic stage, and census region.

KEY RESULTS

By June 12, a between-county difference in average nursing home size equal to 1 bed was associated with 3.92 additional SARS-COV-2 cases (95% CI = 2.14 to 5.69; P < 0.001), on average, and counties subject to CON laws had 104.53 additional SARS-CoV-2 cases (95% CI = 7.68 to 201.38; P < 0.05), on average. Counties with larger nursing homes also demonstrated higher growth in the frequency of SARS-COV-2 throughout the study period.

CONCLUSIONS

At the county level, average nursing home size and CON law presence was associated with a greater frequency of SARS-CoV-2 cases. Controlling the impact of the coronavirus 2019 pandemic may require additional resources for communities with larger nursing homes and more attention towards long-term care policies.

Connecting policy to licensed assisted living communities, introducing health services regulatory analysis

OBJECTIVE

To document dementia-relevant state assisted living regulations and their changes over time as they pertain to licensed care settings.

DATA SOURCES

For all states, current directories of licensed assisted living communities and state regulations for each year, 2007-2018, were obtained from state agency websites and Nexis Uni, respectively.

STUDY DESIGN

We identified multiple types of regulatory classifications for each state and documented the presence or absence of specific dementia care provisions in the regulations for each type by study year. Maps and summary statistics were used to compare results to previous research and document change longitudinally.

DATA COLLECTION/EXTRACTION METHODS

We used a policy analysis approach to connect communities listed in directories to applicable regulatory text. Then, we employed policy surveillance and question-based coding to record the presence or absence of specific policies for each classification and study year.

PRINCIPAL FINDINGS

Our team empirically documented provisions requiring dementia-specific training for administrators and direct care staff, and cognitive impairment screening for each study year. We found that 23 states added one or more of these requirements for one or more license types, but the states that had these provisions for all types of licensed assisted living declined from four to two.

CONCLUSIONS

We identified significant, previously undocumented, within-state policy variation for assisted living licensed settings between 2007 and 2018. Using the regulatory classification instead of the state as the unit of analysis revealed that many policy adoptions were limited to dementia-designated settings. This suggests that people living with dementia in general assisted living are not afforded the same protections. We call our approach health services regulatory analysis and argue that it has the potential to identify gaps in existing policies, an important endeavor for health services research in assisted living and other care settings.

Certificate-Of-Need Regulation and Healthcare Service Quality: Evidence from the Nursing Home Industry

This quantitative study investigates the effect of certificate-of-need (CON) regulation on the quality of care in the nursing home industry. It uses county-level demographic data from the 48 contiguous US states that are extracted from the American Community Survey (ACS) and cover the years 2012, 2013, and 2014. In doing so, it employs a new set of service quality variables captured from a variety of county-level data sources. Instrumental variables results indicate that health survey scores for nursing homes that are computed by healthcare professionals are about 18-24% lower, depending on the type of nursing home under consideration, in states with CON regulation. We also find that the presence of CON regulation leads to a substitution of lower-quality certified nursing assistant care for higher-quality licensed practical nurse care, regardless of the type of nursing home under consideration.

Certificate-of-Need State Laws and Elective Posterior Lumbar Fusions: Is It Time to Repeal the Mandate?

OBJECTIVES

Our study aimed to assess whether elective posterior lumbar fusions (PLFs) performed in states with Certificate-of-Need (CON) laws versus states without CON laws had lower utilization rates, lower costs, and better quality of care.

METHODS

The 2005-2014 100% Medicare Standard Analytical File was queried to identify patients undergoing elective 1- to 3-level PLF. Differences in per-capita utilization, 90-day reimbursements, and proportion of high-volume between CON and No-CON states were reported. Multivariate analyses were used to analyze 90-day complications and readmissions.

RESULTS

A total of 188,687 patients underwent an elective 1- to 3-level PLF in a CON state and 167,642 patients in a No-CON state during 2005-2014. The average per capita utilization of PLFs was lower in CON states as compared with No-CON states (14.5 vs. 15.4 per 10,000 population; P < 0.001). Average 90-day reimbursements between CON and No-CON states differed by a small amount ($22,115 vs. $21,802). CON states had a higher proportion of high-volume facilities (CON vs. No CON-40.9% vs. 29.9%; P < 0.05) and lower proportion of low-volume facilities (CON vs. No-CON-37.2% vs. 45.0%; P < 0.05). PLFs performed in CON states had slightly lower odds of 90-day complications (odds ratio 0.97 [95% confidence interval 0.96-0.99]; P < 0.001) and readmissions (odds ratio 0.95 [95% confidence interval 0.93-0.97]; P < 0.001).

CONCLUSIONS

The presence of CON laws was associated with lower utilization of elective 1- to 3-level PLFs and a greater number of high-volume facilities. However, their effect on quality of care, via reduction of 90-day readmissions and 90-day complications, is minimally significant.

Do financial incentives matter? Effects of Medicare price shocks on skilled nursing facility care

Skilled nursing facility (SNF) spending has been one of the fastest growing categories of Medicare spending over the past few decades, and reductions in SNF payments are often recommended as part of Medicare cost containment efforts. Using a quasi-experiment resulting from a policy-driven and facility-specific Medicare payment change, we provide new evidence on how Medicare payment changes affect the amount of SNF care provided to Medicare patients. Specifically, we examine a one-time, plausibly exogenous change in the hospital wage index, an area-level adjustment to SNF payments that affected the majority of SNFs nationwide. Using a panel dataset of SNFs, we model the effects of these payment changes on more than 12,000 SNFs across the United States. We find that increases in Medicare payment rates to SNFs increased the total number of Medicare resident days at SNFs. Specifically, a 5% payment increase raised Medicare resident days by 2.33% at facilities with a 10% Medicare share relative to 0%. Further, the effects were asymmetric: Although Medicare payment increases affected Medicare days, payment decreases did not. Our results have important implications for policies that alter the Medicare base payment rates to SNFs and other health care providers.

Certificate of need and the cost of competition in home healthcare markets

We used 2010-16 Medicare Cost Reports for 10,737 freestanding home health agencies (HHAs) to examine the impact of home health (HH) and nursing home (NH) certificate-of-need (CON) laws on HHA caseload, total and per-patient variable costs. After adjusting for other HHA characteristics, total costs were higher in states with only HH CON laws ($2,975,698), only NH CON laws ($1,768,097), and both types of laws ($3,511,277), compared with no CON laws ($1,538,536). Higher costs were driven by caseloads, as CON reduced per-patient costs. Additional research is needed to distinguish whether this is due to skimping on quality vs. economies of scale.

Are coresidence and nursing homes substitutes? Evidence from Medicaid spend-down provisions

This paper measures the extent to which the price of nursing home care affects a potential substitute living arrangement: coresidence with adult children. Exploiting variation in state Medicaid income "spend-down" provisions over time, I find that living in a state with a spend-down provision decreases the prevalence of coresidence with adult children by 1-4 percentage points for single elderly individuals, with a corresponding increase in the use of nursing home care. These findings suggest that changes in Medicaid eligibility for long-term care benefits could have large impacts on living arrangements, care utilization patterns, and Medicaid expenditures.