Incentivizing Better Quality of Care: The Role of Medicaid and Competition in the Nursing Home Industry

Smart Home Technologies for Enhancing Independence of Living and Reducing Care Dependence in Older Adults: A Systematic Review

AIM

To systematically review the potential of smart home technology to enhance the independence of older adults and reduce their dependence on care. Additionally, it sought to examine the positive impacts of such technology on their golden years.

DESIGN

A systematic review based on Preferred Reporting Items for Systematic Review and Meta-Analyses (PRISMA).

DATA SOURCES

The search was conducted on 8 April 2024. Peer-reviewed studies in PubMed, Embase, Web of Science, IEEE Xplore, Scopus, The Cochrane Library, CINAHL, CNKI, WANFANG DATA and VIP from 1 January 2000 to 8 April 2024 were searched.

METHODS

The methodological quality assessment used the Mixed Methods Appraisal Tool (MMAT). Positive findings relevant to this study were extracted from the literature and analysed using thematic synthesis.

RESULTS

After meticulously examining 3404 studies, we identified 21 relevant sources for in-depth analysis, including qualitative studies (n = 10), experimental studies (n = 9) and mixed method studies (n = 2). These sources were grouped into five core themes based on the pivotal role of smart home technologies in enabling ageing in place: daily monitoring, assisted living activities, life reminders, functional improvement and emotional companionship. The study found that smart home technology offers numerous benefits to the lives of older adults, including increased independence, psychological support, improved cognitive functioning, enhanced self-management, increased mobility, support for caregivers, promoted social engagement and enhanced quality of life.

CONCLUSION

Smart home technology can enhance the independence of older adults' lives, reduce their dependence on care, alleviate the burden on caregivers and promote home-based elderly care.

IMPACT

This systematic review contributes to understanding the capability of smart home technology to promote elderly care at home and help better utilise smart home technology to benefit older adults. Older adults and their caregivers should be encouraged to adopt this technology to improve older adults' quality of life.

PATIENT OR PUBLIC CONTRIBUTION

No patient or public contribution.

Assessing the quality of public services: For-profits, chains, and concentration in the hospital market

We examine variation in US hospital quality across ownership, chain membership, and market concentration. We propose a new measure of quality derived from penalties imposed on hospitals under the flagship Hospital Readmissions Reduction Program, and use regression models to risk-adjust for hospital characteristics and county demographics. While the overall association between for-profit ownership and quality is negative, there is evidence of substantial heterogeneity. The quality of for-profit relative to non-profit hospitals declines with increasing market concentration. Moreover, the quality gap is primarily driven by for-profit chains. While the competition result mirrors earlier findings in the literature, the chain result appears to be new: it suggests that any potential quality gains afforded by chains are mostly realized by not-for-profit hospitals.

The causal impact of shared decision making on pain outcomes: Gender matters

This national US study determined the causal impact of shared decision making (SDM) on pain outcomes, including any overall pain and the subcategories of any acute pain and any chronic pain. We additionally examined whether the causal impact of SDM on overall pain is moderated by gender, race-ethnicity, clinician-patient racial-ethnic concordance, and clinician-patient gender concordance. We used national US data from the 2003-2017 Medical Expenditure Panel Survey, which were externally valid to the US national non-institutionalized population, employed a standard measure of shared decision making, and applied an internally-valid two-stage least squares approach that used the peer SDM behavior of similar clinicians as an instrument. The instrument was sufficiently strong and statistically uncorrelated with patient characteristics. We found a large impact of SDM on both female and male chronic pain outcomes, where the effect for females was approximately 50% larger than for males, with a 10 percentage point increase in SDM quality resulted fewer females experiencing chronic pain that interfered with everyday activities (-24.8 percentage points; 95% confidence interval [CI]: 43.3, -6.4) than males (-16.5 percentage points; 95% CI: 32.9, -1.0). We estimated that a 10 percentage point national increase in the SDM index would thus result in 10.1 million fewer females and 5.7 million fewer males in the US experiencing chronic pain that interfered with their daily activities. Policy implications include both increasing the quality of SDM for all patients and educating male patients on the value of SDM.

Medicare Advantage growth and skilled nursing facility finances

OBJECTIVE

To examine the relationship between growth in Medicare Advantage (MA) enrollment and changes in finances at skilled nursing facilities (SNFs).

DATA SOURCES

Medicare SNF cost reports, LTCFocus.org data, and county MA penetration rates.

STUDY DESIGN

We used ordinary least squares regression with SNF and year fixed effects. Our primary outcomes were SNF revenues, expenses, profits, and occupancy. Our primary independent variable was the yearly county Medicare Advantage penetration.

DATA COLLECTION/EXTRACTION

We linked facility-year data from 2012 to 2019 obtained from cost reports and LTCFocus.org to county-year MA penetration.

PRINCIPAL FINDINGS

A 10 percentage point increase in county MA enrollment was associated with a $213,883.89 (95% Confidence Interval [CI]: -296,869.08, -130,898.71) decrease in revenue, a $132,456.19 (95% CI: -203,852.28, -61,060.10) decrease in expenses, and a 0.59 percentage point (95% CI: -0.97, -0.21) decrease in profit margin. A 10 percentage point increase in county MA enrollment was associated with a decline (-318.93; 95% CI: -468.84, -169.02) in the number of resident-days (a measure of occupancy) as well as a decline in the revenue per resident day ($4.50; 95% CI: -6.81, -2.20), potentially because of lower prices in MA. There was also a decline in expenses per patient day (-2.35; 95% CI: -4.76, 0.05), though this was only statistically significant at the 10% level. While increased MA enrollment was associated with a substantial decline in the number of Medicare resident days (487.53; 95% CI: -588.70, -386.37), this was partially offset by an increase in other payer (e.g., private pay) resident days (285.91; 95% CI: 128.18, 443.63). Increased MA enrollment was not associated with changes in the number of Medicaid resident days or a decrease in staffing per resident day.

CONCLUSION

SNFs in counties with more MA growth had substantially greater relative declines in revenue, expenses, and profit margins. The continued growth of MA may result in significant changes in the SNF industry.

Victimization in Unethical Unlicensed Small Residential Care Homes in the United States: The Case for Whole System Disruption

In the United States, small residential care homes provide affordable community-based care for disabled older adults. Also called adult foster care homes, residential care facilities, group homes, or board and care homes, small residential care homes are typically private, small businesses operating in single-family dwellings that provide round-the-clock care in a home-like setting in residential neighborhoods. While most states license small residential care homes they also exist, legally and illegally, as unlicensed and unregulated operations. The quality of care in some unlicensed and unregulated small residential care homes can be questionable. Disabled older adults are targeted and victimized by unethical small residential care home operators for financial gain. This commentary highlights the need for whole system disruption to end victimization in unethical unlicensed and unregulated small residential care homes through case studies of the abuse and neglect of residents living in unethical unlicensed operations and recommends ambitious goals centered on reducing secondary financial gains and medically neglectful practices. These recommendations are at federal, state, and local levels, and include creating a federal definition of small residential care homes, increasing and coupling government incomes with state registration and employee misconduct registry checks, increasing oversight and assessment, improving temporary guardianship processes, providing avenues for reporting abuse, and developing older adult fatality review teams.

The impact of a long-term care information campaign on insurance coverage

I estimate the impact of an information campaign on long-term care planning behaviors. I identify this effect using the staggered timing of the federal-state "Own Your Future" campaign, which urged individuals to plan ahead for long-term care needs and reached 26 states over five years. I find the campaign increased long-term care insurance coverage for individuals in the top quintile of the asset distribution by four percentage points, or seventeen percent. A back-of-the-envelope calculation indicates Medicaid savings of $483 million in present value.

The health effects of nursing home specialization in post-acute care

Nursing homes serve both long-term care and post-acute care (PAC) patients, two groups with distinct financing mechanisms and requirements for care. We examine empirically the effect of nursing home specialization in PAC using 2011-2018 data for Medicare patients admitted to nursing homes following a hospital stay. To address patient selection into specialized nursing homes, we use an instrumental variables approach that exploits variation over time in the distance from the patient's residential ZIP code to the closest nursing home with different levels of PAC specialization. We find that patients admitted to nursing homes more specialized in PAC have lower hospital readmissions and mortality, longer nursing home stays, and higher Medicare spending for the episode of care, suggesting that specialization improves patient outcomes but at higher costs.

Insurance coverage, long-term care utilization, and health outcomes

How does the generosity of social insurance coverage affect the demand for healthcare and health outcomes of elderly people? This paper presents an examination of the effects of insurance coverage on long-term care (LTC) utilization and its health consequences using administrative data of the public long-term care insurance (LTCI) system in Japan. In LTCI, a recipient's health score determines their insurance coverage limit, and thresholds of the score generate discontinuous changes in the level of coverage limits. I implement a regression discontinuity design and find that coverage expansion increases recipients' LTC utilization considerably irrespective of their health status. When more generous insurance coverage is available, recipients with low care needs increase day care and rehabilitation services, whereas those with high care needs increase home care services. Moreover, using more LTC has little effect on health outcomes such as the health score and the entry into nursing homes. Together, these results suggest that generous LTCI coverage can induce excessive LTC utilization without having health benefits.

Use of Intergovernmental Transfers-based Medicaid Supplemental Payments to Boost Nursing Home Finances: Evidence From Indiana Nursing Homes

BACKGROUND

Indiana provides intergovernmental transfers-based supplemental payment to nursing homes owned/operated by the nonstate governmental organization (NSGO) but NSGOs may divert substantial supplemental payments away from participating nursing homes.

OBJECTIVE

The aim of this study was to estimate the effect of participation in the intergovernmental transfers-based Medicaid supplemental payment program on nursing home revenue and expenditures.

RESEARCH DESIGN

Difference-in-differences regressions using Callaway and Sant'Anna method accounting for treatment effect heterogeneity across groups and over time.

SUBJECTS

All 410 Medicare and Medicaid-certified nursing homes in Indiana from 2009 to 2017 with nonmissing data (N=3170).

MEASURES

The key independent variable is a binary variable indicating NSGO ownership. Outcome variables include total revenue, total operating, clinical, hotel, and administrative expenses as well as profit margins extracted from Medicare Cost Report. Control variables include facility and resident characteristics from Nursing Home Compare and LTCfocus data.

RESULTS

Supplemental payments increased nursing home revenues by about $0.58 million on average but payments were larger in later years. On a per-person per day basis, nursing home revenue increased by $21.9 dollars with an increase in administrative ($11.3), and hotel ($6.9) expenses but a decrease in clinical ($4.67) expenses.

CONCLUSIONS

NSGO-owned/operated nursing homes received only a fraction of the total supplemental payments on average, but we observed increased payments to nursing homes in later years. Participating nursing homes did not increase clinical expenses. Our findings raise questions on the transparency of the financing arrangements between NSGOs and nursing homes and the need to link supplemental payments to clinical expenses.

What Can Economics Say about Alzheimer's Disease?

Alzheimer's disease (AD) affects one in ten people aged 65 or older and is the most expensive disease in the United States. We describe the central economic questions raised by AD. Although there is overlap with the economics of aging and health, the defining feature of the "economics of Alzheimer's disease" is an emphasis on choice by cognitively impaired patients that affects health and financial well-being, and situations in which dynamic contracts between patients and caregivers are useful but difficult to enforce. A focus on innovation in AD prevention, treatment, and care is also critical given the enormous social cost of AD and present lack of understanding of its causes, which raises questions of optimal resource allocation and alignment of private and social incentives. The enormous scope for economists to contribute to our understanding of AD-related issues including drug development, efficient care delivery, dynamic contracting, long-term care risk, financial decision-making, and the design of public programs for AD suggests a rich research program for many areas of economics.

Impact of long-term care insurance on the health status of middle-aged and older adults

With the increase of aging population, long-term care insurance (LTCI) systems have become important for improving individuals' health. However, the effect of LTCI on health is unclear, especially in developing countries, owing to the lack of random policy shocks and comprehensive databases. This study investigates the Chinese LTCI pilot program, using four waves of the China Health and Retirement Longitudinal Study database (sample aged ≥45 years) from 2011 to 2018. The recent difference-in-differences approaches for staggered design, which are capable of dealing with the negative weights issue, are used to investigate changes in health status, measured by self-rated health (SRH), (instrumental) activities of daily living, self-rated depression, and cognition, in pilot and non-pilot cities before and after LTCI implementation. Long-term care insurance has a significant average effect on SRH improvement and a long-term positive effect on cognition for middle-aged and older populations. This study provides the first evaluation of LTCI policy on health outcomes using the recent difference-in-differences approaches. It provides evidence for the overall health improvement achieved through the LTCI and offers positive reinforcement and potential areas for improvement in establishing LTCI worldwide.

Risk of Discharge to Lower-Quality Nursing Homes Among Hospitalized Older Adults With Alzheimer Disease and Related Dementias

Importance

Individuals with Alzheimer disease and related dementias (ADRD) frequently require skilled nursing facility (SNF) care following hospitalization. Despite lower SNF incentives to care for the ADRD population, knowledge on how the quality of SNF care differs for those with vs without ADRD is limited.

Objective

To examine whether persons with ADRD are systematically admitted to lower-quality SNFs.

Design, Setting, and Participants

Cross-sectional analysis of Medicare beneficiaries hospitalized between January 1, 2017, and December 31, 2019, was conducted. Data analysis was performed from January 15 to May 30, 2022. Participants were discharged to a Medicare-certified SNF from a general acute hospital. Patients younger than 65 years, enrolled in Medicare Advantage, and with prior SNF or long-term nursing home use within 1 year of hospitalization were excluded.

Exposures

The quality level of all SNFs available at the patient's discharge, measured using publicly reported 5-star staffing ratings. The 5-star ratings were grouped into 3 levels (1-2 stars [reference category, low-quality], 3 stars [average-quality], and 4-5 stars [high-quality]).

Main Outcomes and Measures

The outcome was the SNF a patient entered among the possible SNF destinations available at discharge. Differences in the association between SNF quality and SNF entry for patients with and without ADRD were assessed using a conditional logit model, which simultaneously controls for differences in discharging hospital, residential neighborhood, and the other characteristics (eg, postacute care specialization) of all SNFs available at discharge.

Results

The sample included 2 619 464 patients (mean [SD] age, 81.3 [8.6] years; 61% women; 87% were White; 8% were Black; 22% with ADRD). The probability of discharge to higher quality SNFs was lower for patients with ADRD. If the star rating of an SNF was high instead of low, the log-odds of being discharged to it increased by 0.31 for patients with ADRD and by 0.47 for those without ADRD (difference, -0.16; P < .001). The weaker association between quality and entry for patients with ADRD indicates that they are less likely to be discharged to high-quality SNFs.

Conclusions and Relevance

The findings of this study suggest that patients with ADRD are more likely to be discharged to lower-quality SNFs. Targeted reforms, such as ADRD-specific compensation adjustments, may be needed to improve access to better SNFs for patients with ADRD.

The 2021 proposal to increase market forces in the Australian residential aged-care sector

In Australia, the US and Europe, policy makers use markets to incentivise aged care providers to produce greater quality care. The Australian Government announced in 2021 that it would further increase market forces in residential aged care to improve quality. The proposals respond to poor quality found within residential aged care, with overuse of psychotropic medications and physical constraints, social isolation and neglect. This paper outlines the market-orientated reforms the Government seeks to implement, including the policy development pathway over the last two decades. It refers to a theoretical model of provider behaviour under administered prices, and empirical research on the impact of similar market-orientated reforms delivered elsewhere, to highlight the reforms' strengths, weaknesses, and potential market outcomes. This paper concludes by identifying additional reforms that could better incentivise care quality and offers lessons to countries that have sought to marketise their nursing home care sectors.

Healthcare Rationing in Public Insurance Programs: Evidence from Medicaid

We study two mechanisms used by public health insurance programs for rationing health care: outsourcing to private managed care plans and quantity limits for prescription drugs. Leveraging a natural experiment in Texas’s Medicaid program, we find that the shift to managed care and the relaxation of a strict drug cap increased access to high-value drugs and outpatient services and reduced avoidable hospitalizations. Program costs increased significantly, indicating a trade-off between cost and quality. We provide suggestive evidence attributing the reduction in hospitalizations to the relaxation of the drug cap and much of the spending increase to the shift to managed care. (JEL G22, H75, I13, I18, I38)

Nursing Home Competition, Prices, and Quality: A Scoping Review and Policy Lessons

BACKGROUND AND OBJECTIVES

In recent years, countries have increasingly relied on markets to improve efficiency, contain costs, and maintain quality in aged care. Under the right conditions, competition can spur providers to compete by offering better prices and higher quality of services. However, in aged care, market failures can be extensive. Information about prices and quality may not be readily available and search costs can be high. This study undertakes a scoping review on competition in the nursing home sector, with an emphasis on empirical evidence in relation to how competition affects prices and quality of care.

RESEARCH DESIGN AND METHODS

Online databases were used to identify studies published in the English language between 1988 and 2020. A total of 50 studies covering 9 countries are reviewed.

RESULTS

The review finds conflicting evidence on the relationship between competition and quality. Some studies find greater competition leading to higher quality, others find the opposite. Institutional features such as the presence of binding supply restrictions on nursing homes and public reporting of quality information are important considerations. Most studies find greater competition tends to result in lower prices, although the effect is small.

DISCUSSION AND IMPLICATIONS

The literature offers several key policy lessons, including the relationship between supply restrictions and quality, which has implications on whether increasing subsidies can result in higher quality and the importance of price transparency and public reporting of quality.

Paying for the view? How nursing home prices affect certified staffing ratios

Many countries limit public and private reimbursement for nursing care costs for social or financial reasons. Still, quality varies across nursing homes. We explore the causal link between case-mix adjusted nurse staffing ratios as an indicator of care quality and different price components in Swiss nursing homes. The Swiss reimbursement system limits and subsidizes the care price at the cantonal level, which implicitly limits staffing ratios, while the residents cover the nursing home-specific lodging price privately. To estimate causal effects, we exploit (i) the exogeneity of the Swiss care price regulation, (ii) nursing-home fixed effects estimations and (iii) instrumental variables for the lodging price. Our estimates show a positive impact of prices on certified staffing ratios. We find that a 10% increase in care prices increases certified staffing ratios by 3-4%. A comparable 10% increase in lodging prices raises certified staffing ratios by 1.5-10% (depending on the model). Our findings highlight that price limits for nursing care impose a limit on staffing ratios. Furthermore, our results indicate that providers circumvent price limits by increasing lodging prices that are privately covered. Thus, this cost shifting implicitly shifts the financial burden to the residents.

Reimagining Financing and Payment of Long-Term Care

The COVID-19 pandemic revealed fundamental problems with the structure of long-term care financing and payment in the United States. The piecemeal system that exists suffers from several key problems, including underfunding, fragmentation across types and sites of care, and substantial variation in payment across states and populations. These problems result in inefficient allocation of resources, limited access to care, substandard quality, and inequities in both access and quality. We propose a new federal benefit for long-term care, most likely as part of the Medicare program. Essential features of this benefit include taxpayer subsidies, along the lines of other Medicare benefits, and coverage across the range of long-term care services, including both residential and home- and community-based care. A new federal benefit has the most potential to break down administrative barriers and improve resource allocation, to ensure adequate payment rates across all states, to expand access to care by spreading risk across the entire Medicare population, and to improve equity by extending coverage to all Medicare beneficiaries who want it. A new federal benefit is politically challenging, requiring bold action by Congress, and entails the risks of administrative challenges and unintended consequences. However, in this case, retaining the status quo remains the far greater risk.

Abuse and Neglect in Nursing Homes: The Role of Serious Mental Illness

BACKGROUND AND OBJECTIVES

Nursing homes (NH) are serving a large number of residents with serious mental illness (SMI). We analyze the highest ("High-SMI") quartile of NHs based on the proportion of residents with SMI and compare NHs on health deficiencies and the incidence of deficiencies given for resident abuse, neglect, and involuntary seclusion.

RESEARCH DESIGN AND METHODS

We used national Certification and Survey Provider Enhanced Reports (CASPER) data for all freestanding certified NHs in the continental United States from 2014 to 2017 (14,698 NHs; 41,717 recertification inspections; 246,528 deficiencies). Differences in the number of deficiencies, a weighted deficiency score, the deficiency grade, and the facility characteristics associated with deficiencies for abuse, neglect, and involuntary seclusion were examined in High-SMI. Incidence rate ratios (IRR) and odds ratios (OR) were reported with 95% confidence intervals.

RESULTS

High-SMI NHs did not receive more deficiencies or a greater weighted deficiency score per recertification inspection. Deficiencies given to High-SMI NHs were associated with a wider scope, especially Pattern (IRR:1.03;[1.00, 1.07]) and Widespread (IRR:1.07;[1.02, 1.11]). High-SMI NHs were more likely to be cited for resident abuse and neglect (OR:1.49;[1.23, 1.81]) and the policies to prohibit and monitor for abuse and neglect (OR:1.18;[1.08, 1.30]) in comparison to all other NHs.

DISCUSSION AND IMPLICATIONS

Although resident abuse, neglect, and involuntary seclusion are rarely cited, these deficiencies are disproportionately found in High-SMI NHs. Further work is needed to disentangle the antecedents to potential resident abuse and neglect in those with mental healthcare needs.

Organizational Characteristics and the Adoption of Electronic Health Records Among Nursing Homes in One Southern State

Electronic health records (EHRs) can improve quality of care and patient safety, as demonstrated in a variety of health care settings. However, greater use of EHRs in nursing homes (NHs) is needed. To understand which NHs have and have not adopted EHR systems, all federally certified NHs in Arkansas (n = 223) were surveyed, with 27.9% responding. Non-responders were similar to responders on all characteristics except for staffing skill mix, with responders having a higher skill mix than non-responders. Two thirds of responding Arkansas NHs reported having an EHR system in use (69.8%), while only a few reported no plans for an EHR system (4.8%). NHs with greater resources and in competitive markets were more likely to implement EHR systems. Full implementation across all NHs may require intervention, which should be explored in future research. In addition, future investigation should consider the level of interoperability of EHR systems that are in place among NHs.