Medicaid nursing home reimbursement methods and per diem rates affect costs, quality, provider equity, and access. Policymakers are understandably interested in variation across states in per diem rates, particularly because of wide interstate variation, with a ratio between 4 and 6 times of the highest average state rate to the lowest average state rate every year for over two decades. Comparison of rates is made complex, however, by such factors as interstate differences in what is included in daily rates. States vary widely in whether they include various ancillary services and commodities in daily rates versus covering the costs of such ancillaries outside of the rates. Data for period 1987-1998 were drawn from a series of national surveys of Medicaid long-term care reimbursement. Employing a random-effects model, estimated using the PANEL option in LIMDEP, we estimated effects on state average daily Medicaid nursing facility rates in constant dollars of the inclusion of a set of ancillary services in those rates. Ancillaries considered were: physical therapy, occupational therapy, prescription drugs, non-legend drugs, durable medical equipment, medical supplies, and physician services. Rates averaged higher when they included durable medical equipment, prescription drugs, and occupational therapy; but averaged lower when physical therapy was included. Adjusting for the inclusion of ancillaries in rates leads in some cases to a very different ranking of states than obtained from ranking unadjusted rates. Public and industry policymakers should consider the inclusion of ancillaries in rates when considering the relative adequacy of per diem rates across states.
Learning Objectives: At the end of this session, participants will be able to: understand issues of reimbursement of ancillary services as part of Medicaid nursing facility reimbursement, appreciate the importance of ancillaries in state rate-setting, and more adequately compare average per diem rates across states
Keywords: Nursing Homes, Medicaid
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.