Nursing home markets were once almost universally characterized by high occupancy rates, long queues, and extended waiting times for entry by Medicaid recipients. Several early studies found evidence of an excess demand paradigm where an increase in Medicaid reimbursement decreased the level of nursing home quality due to a lack of quality competition for Medicaid recipients. Although excess demand may still exist in some areas, there has been a significant shift in the nursing home market. The national occupancy rate has fallen from 95% to 85% over the last two decades. More recent economic studies have found a positive relationship between Medicaid reimbursement and quality. An obvious explanation for this variation in findings is the decline in utilization over time. However, we cannot definitively make this assertion due to important differences in methodologies across studies. This current study replicates earlier data, methods and quality measures in an effort to resolve these differences across studies. Linking data from the 1981 Medicare/Medicaid Automated Certification files, the 1996 Online Survey Certification and Reporting system, the Area Resource File, and facility- and state-level reimbursement information, this study finds a positive, albeit small, effect of reimbursement on quality. Although this paper does find some evidence of excess demand within the nursing home market, this analysis was not able to replicate the counterintuitive negative relationship between reimbursement and nursing home quality from earlier studies. The difference in findings across studies is attributed to the decline in nursing home utilization over the last two decades.
Learning Objectives: At the conclusion of the session, the participant in this session will be able to: 1. Discuss the theoretical and empirical effects of state Medicaid reimbursement policies on nursing home quality. 2. Recognize the role of recent changes in the market for nursing home care in the provision of quality.
Keywords: Nursing Home Markets, Quality of Care
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.