The nursing staff hours available to Medicaid nursing home residents vary enormously across facilities. Medicaid programs, which fund over two-thirds of all resident days, set nursing home payment rates which vary in their support for direct care resources. This paper uses economic theory of the firm to examine the effect of state rate-setting methods on hours of nursing care, adjusted for case mix, provided by nursing homes. The study tests the hypothesis that nursing homes in states with rate methods that are more restrictive with respect to a facility's own costs (for example, that pay a flat rate regardless of facility costs) offer fewer staff hours per case-mix adjusted resident day than nursing homes in states with less restrictive methods (for example, cost reimbursement up to ceilings). The analysis accounts for private demand factors and fixed facility characteristics. Data on residents and staffing accessed from 1996 certification surveys for 13,329 nursing homes was combined with market-area characteristics and state rate-setting policy variables. Nursing homes in states with fixed class rates were found to have about 30% lower staffing per resident day (case-mix adjusted) than those in states without class rates, and earlier base years for cost-based rates had a small but significant negative impact on case-mix adjusted staffing. The findings indicate that, although repeal of the Boren Amendment eliminated the Federal requirement that Medicaid programs pay "reasonable and adequate" rates, further unlinking of rates from costs is likely to reduce care hours available to Medicaid beneficiaries.
Learning Objectives: Articulate how state Medicaid rate methods affect nursing home decisions about care resources supplied per resident day and to discuss policy implications of the trend toward restrictive methods
Presenting author's disclosure statement:
Organization/institution whose products or services will be discussed: None
I do not have any significant financial interest/arrangement or affiliation with any organization/institution whose products or services are being discussed in this session.