Impact of California's 2004 Reimbursement Reform on Staffing and Quality

California adopted a facility-specific cost-based reimbursement system for nursing homes in 2004 which was implemented in 2005. This paper reports on an evaluation of the initial impact of the legislation using secondary statistical data from public use data files to examine the impact of the new rate system on: (1) nursing home staffing levels and turnover rates, and (2) the quality of nursing home care as measured by complaints and total federal and state deficiencies and citations. The analysis used descriptive statistics to look at significant differences before and after the legislation (2004 compared with 2006. Total staffing hours increased by 3 percent and RN hours increased by 1 percent, but staffing was well below levels recommended by experts. Nursing facility turnover rates grew slightly worse (by 1 percent). Wages for nursing assistant increased by 7 percent but did not increase when adjusted for inflation, and benefit levels declined. Nursing facility complaints increased by 38 percent, and total deficiencies and citations increased by 6 percent. Of the total nursing facilities, 88 percent were out of compliance with federal regulations. Overall, the first year of implementation did not show significant improvement in staffing, turnover, wages and benefits, complaints or deficiencies. Without attaching more specific requirements for staffing levels and quality standards to the new reimbursement rates, the new payment system appears unlikely to achieve its goal of improving quality for nursing home residents.