Effects of Medicare Payment Changes on Nursing Home Staffing and Deficiencies

Abstract

Medicare's PPS system and associated rate cuts for SNFs have had a negative effect on staffing and regulatory compliance. Further research is necessary to determine whether these changes are associated with worse outcomes. Findings from this investigation could help guide policy modifications that support the provision of quality nursing home care.

Medicaid Reimbursement and the Quality of Nursing Home Care: A Case Study of Medi-Cal Long-Term Care Reimbursement Act of 2004 in California

“…No major Medicare payment policy changes occurred during the study period, which have been found to influence quality of care in the nursing home [95][96]. In addition, to my knowledge, there were no changes in nursing home regulations during this time period.…”

“…Among for-profit nursing homes, the elimination of cost reimbursement was associated with a larger drop in nurse staffing [95]. Konetzka et al found that professional staffing decreased and regulatory deficiencies increased with PPS, and the effects increased with the percent of Medicare residents in the facility, except in facilities with the highest proportions of Medicare residents [96]. In addition, after the implementation of Medicare PPS, compared with non-profit SNFs, for-profit SNFs dramatically altered the services they provided in response to new financial incentives by decreasing the percentage of residents receiving extremely high levels of rehabilitation therapy [97].…”

“…For example, the Balanced Budget Act of 1997 (BBA) changed the way Medicare pays for residents receiving skilled nursing care, from retrospective cost-based system to prospective payment system, and substantially reduced the payment. As a result, professional staffing levels decreased and regulatory deficiencies increased [96]. Therefore, the flat-rate payment system may provide undesirable incentives for cost minimizing, possibly negatively affecting quality.…”

Implications of global budget payment system on nursing home costs

“…Improved methods to control for changes in quality and to cope with the potential endogeneity of output and/or quality in cost functions have been proposed (Gertler and Waldman, 1992;Chen and Shea, 2002). Also, direct assessment of the impact of PPS on quality (Konetzka et al, 2004;Konetzka et al, 2006) and access to nursing care (Coburn et al, 1993) have been carried out.…”

“…Using data on U.S. NHs over the period 1996-2000, Konetzka et al (2004) study the impact of PPS on quality by applying a di¤erence-in-di¤erence approach and a negative binomial model. The authors use changes in the professional sta¢ ng and the number of regulatory de…ciencies as proxies for quality.…”