Medicare's New Prospective Payment System for Skilled Nursing Facilities: Effects on Staffing and Qu

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Medicare's New Prospective Payment System for
Skilled Nursing Facilities Effects on Staffing
and Quality of Care

• AcademyHealth 2004 Annual Research Meeting
• Chapin White, MPP PhD
• Post-doctoral Fellow, NBER
• chapin_white_at_post.harvard.edu

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Overview

• Freestanding Skilled Nursing Facilities (SNFs)
• New Medicare payment system for SNFs
• changed payment levels
• eliminated cost reimbursement
• Cost reimbursement vs prospective payment
• Effects on staffing and quality
• Implications for assessing payment adequacy

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Freestanding SNFs

• Resident mix
• 2/3 Medicaid
• 1/10 Medicare
• Nurse staff CNAs, LPNs, RNs
• Provide rehabilitation therapy
• Most are for-profit
• Census 1M total, 100k Medicare

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New Medicare Prospective Payment System (PPS)

• Mandated in BBA-1997, phased in beginning in 1998
• Eliminated cost reimbursement
• Medicare payment levels increased for most
  freestanding SNFs
• Casemix adjustment

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Research Questions

• How did SNF PPS affect nurse staffing and
  quality?
• Payment Level Effect
• D payment levels ? D nurse staffing/quality?

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Research Questions

• How did SNF PPS affect nurse staffing and
  quality?
• Payment Level Effect
• D payment levels ? D nurse staffing/quality?
• Marginal Payment Effect
• D cost reimbursement ? D nurse staffing/quality?

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Research Strategy

• Facility-level analysis
• Medicare resident fraction
• exposure to new PPS (mean9)
• Medicare payment impact
• change in Medicare payment per resident per day
  (mean 40, wide range)
• Overall payment impact
• change in revenue per resident per day (mean2)

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Data

• Freestanding SNFs (n9067)
• Changes, 1997 (pre) to 2001 (post)
• payments ( per resident per day,
  inflation-adjusted)
• staffing ( per resident per day)
• quality measures (process- and outcome-based)
• staffing and quality adjusted for resident
  characteristics
• "Long differences"

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Results Nurse Staffing
Plt0.10, Plt0.05, Plt0.01
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Results Quality Measures
Plt0.10, Plt0.05, Plt0.01
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Offsetting Effects

• Payment level effect small increase in nurse
  staffing
• 0.46 per resident per day
• Marginal payment effect big decrease in nurse
  staffing
• 2.10 per resident per day
• some deterioration in quality

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Payment Adequacy

• How is payment adequacy assessed?
• Access to services
• Quality
• Efficiency
• What determines payment adequacy?
• payment levels
• also marginal payments
• What marginal payment is appropriate?

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Marginal Payment Examples