Skilled Nursing Facility Participation in a Voluntary Medicare Bundled Payment Program

Abstract

Importance: Model 3 of the Bundled Payments for Care Improvement (BPCI) is an alternative payment model in which an entity takes accountability for the episode costs. It is unclear how BPCI affected the overall skilled nursing facility (SNF) financial performance and the differences between facilities with differing racial/ethnic and socioeconomic status (SES) composition of the residents.Objective: The objective of this study was to determine associations between BPCI participation and SNF finances and across-facility differences in SNF financial performance.Design, Setting, and Participants: A longitudinal study spanning 2010-2017, based on difference-in-differences analyses for 575 persistent-participation SNFs, 496 dropout SNFs, and 13,630 eligible nonparticipating SNFs.Main Outcome Measures: Inflation-adjusted operating expenses, revenues, profit, and profit margin.Results: BPCI was associated with reductions of $0.63 million in operating expenses and $0.57 million in operating revenues for the persistent-participation group but had no impact on the dropout group compared with nonparticipating SNFs. Among persistent-participation SNFs, the BPCI-related declines were $0.74 million in operating expenses and $0.52 million in operating revenues for majority-serving SNFs; and $1.33 and $0.82 million in operating expenses and revenues, respectively, for non-Medicaid-dependent SNFs. The between-facility SES gaps in operating expenses were reduced (differential difference-in-differences estimate = $1.09 million). Among dropout SNFs, BPCI showed mixed effects on across-facility SES and racial/ethnic differences in operating expenses and revenues. The BPCI program showed no effect on operating profit measures.Conclusions: BPCI led to reduced operating expenses and revenues for SNFs that participated and remained in the program but had no effect on operating profit indicators and mixed effects on SES and racial/ethnic differences across SNFs.

Skilled Nursing Facility Participation in Bundled Payments Was Related to Small Increases in Nurse Staffing Levels

“…Following previous research (Li et al, 2015), we linked the participation information to the Nursing Home Compare (NHC) reports to identify all the 16,678 Medicare-certified SNFs nationally and their participation status. Since hospital-based SNFs are different from free-standing SNFs in terms of resident severity, care practice, and cost accounting system (Li et al, 2015; Ying et al, 2022), we excluded the 1176 hospital-based SNFs from the dataset. According to previous research (Harrington et al, 2007; Harrington et al, 2012; Li et al, 2015), 1080 free-standing SNFs were excluded from the remaining group as they had zero or more than twenty-four staffing hours, or their staffing hours were outside three standard deviations of the national mean.…”

“…Another key independent variable is a BPCI exposure variable, defined as the proportion of months the SNF was exposed to the program in a given year as SNFs could join BPCI on a rolling base that resulted in different BPCI enrollment dates across years. Similar to the method used in previous studies (Ryan et al, 2017; Ying et al, 2022), this variable is a continuous variable and has a value of 0–1 to fully capture the extent to which the SNF exposed to BPCI in each year. For example, if a persistent-enrollment SNF joined BPCI on October 1, 2013, the exposure variable was specified as 0 for 2010 to 2012, 3 of 12 = .25 in 2013, and 1 for 2014 to 2017.…”

“…Important SNF and market characteristics associated with SNF BPCI participation and nurse staffing levels (Harrington et al, 2012; Holmgren et al, 2018; Konetzka, Stearns, et al, 2008; Li et al, 2015; Ying et al, 2022) were adjusted for in the regressions. Specifically, SNF-level covariates included number of beds, occupancy rate, chain affiliation (yes/no), ownership (for profit, nonprofit, or government owned), percentages of female residents, average age of residents, a case mix index, proportions of Medicare, Black, Indigenous, People of Color (BIPOC), and Medicaid residents, number of admissions per bed, and number of selected BPCI-episodes of the SNF in each year (obtained from the BPCI analytic files as an additional control variable to capture differential exposures to BPCI).…”

“…Market-level characteristics included urban location (yes/ no), unemployment rate, and an index of SNF market competition (defined as 1-the sum of squared shares of SNF beds for all SNFs in the county) (Ying et al, 2022). State dummies accounting for unobserved geographic characteristics, and year dummies capturing secular trends in nurse staffing levels were included in the statistical model as well.…”

Association of Skilled Nursing Facility Participation in Voluntary Bundled Payments With Postacute Care Outcomes for Joint Replacement

“…5 SNFs, which comprised 89% of all model 3 participants, 6 are likely to respond to the reimbursement change as the operation of the facility heavily depends on Medicare payments. Recent national studies [7][8][9][10] have evaluated the associations between SNF participation in BPCI model 3 and changes in efficiency and quality of PAC. For example, Barnett et al 7 found that model 3 was significantly associated with reduced institutional spending among Medicare beneficiaries undergoing lower extremity joint replacement (LEJR) from 2013 to 2017, which was largely attributed to decreases in SNF length of stay without changes in readmissions.…”