THE SMALL GROUP HOME:

This paper covers the possibilities of organizing community services and obtaining funding to make small group homes available to the poor. Statistics show that many frail elderly in nursing homes could funetion well in less protected environments if transition options for housing and services were available, such as the small group home. which fosters self-direction and "mainstreaming" of older persons in an ageintegrated community. It fills a major gap in the continuum of health services at about 213 the cost of nursing home care. Only a few states are experimenting with alternative Medicaid regulations which permit payment for health related services, maintenance, homemaking and ADL assistance. None are known to be testing the small group home concept. Thus many older persons requiring some services must be institutionalized, although there may be no need for intensive nursing care or 24-hour supervision. The poor older person's choice, in particular, is restricted by Medicaid regulations. Demonstration small group homes are proving both cost and care effective. Home Care Research in Frederick, Maryland has several such homes. Such alternative "family style" living, with health related services. should be made available to all persons who qualify, regardless of income.     

The small group home: needed option for the poor elderly.

This paper covers the possibilities of organizing community services and obtaining funding to make small group homes available to the poor. Statistics show that many frail elderly in nursing homes could function well in less protected environments if transition options for housing and services were available, such as the small group home, which fosters self-direction and "mainstreaming" of older persons in an age-integrated community. It fills a major gap in the continuum of health services at about 2/3 the cost of nursing home care. Only a few states are experimenting with alternative Medicaid regulations which permit payment for health related services, maintenance, homemaking and ADL assistance. None are known to be testing the small group home concept. Thus many older persons requiring some services must be institutionalized, although there may be no need for intensive nursing care or 24-hour supervision. The poor older person's choice, in particular, is restricted by Medicaid regulations. Demonstration small group homes are proving both cost and care effective. Home Care Research in Frederick, Maryland has several such homes. Such alternative "family style" living, with health related services, should be made available to all persons who qualify, regardless of income.     

Nursing home cost and ownership type: evidence of interaction effects.

Due to steadily increasing public expenditures for nursing home care, much research has focused on factors that influence nursing home costs, especially for Medicaid patients. Nursing home cost function studies have typically used a number of predictor variables in a multiple regression analysis to determine the effect of these variables on operating cost. Although several authors have suggested that nursing home ownership types have different goal orientations, not necessarily based on economic factors, little attention has been paid to this issue in empirical research. In this study, data from 150 Virginia nursing homes were used in multiple regression analysis to examine factors accounting for nursing home operating costs. The context of the study was the Virginia Medicaid reimbursement system, which has intermediate care and skilled nursing facility (ICF and SNF) facility-specific per diem rates, set according to facility cost histories. The analysis revealed interaction effects between ownership and other predictor variables (e.g., percentage Medicaid residents, case mix, and region), with predictor variables having different effects on cost depending on ownership type. Conclusions are drawn about the goal orientations and behavior of chain-operated, individual for-profit, and public and nonprofit facilities. The implications of these findings for long-term care reimbursement policies are discussed.     

The effects of ownership and ownership change on nursing home industry costs.

OBJECTIVE. This study examines the effects of ownership type and ownership change on nursing home cost structures, differentiating patient care costs from plant costs. DATA SOURCES. Administrative data from the Michigan Department of Social Services, Medical Services Administration (Medicaid), and the Michigan Department of Public Health are used. Cost data are based on audited cost reports for 393 nursing care facilities in Michigan in 1989. Other facility characteristics are based on data from the 1989 annual licensing and certification survey conducted by the Michigan Department of Public Health. STUDY DESIGN. A series of ordinary least squares regressions is estimated, in which the dependent variable is either per diem patient costs or per diem plant costs. Ownership types are defined as chain, proprietary non-chain, freestanding non-profit, government-owned, and hospital-based facilities. Pooled estimation techniques, as well as separate regressions by ownership type, are presented to test for interaction effects. Key variables include whether a facility changed ownership in the preceding five years and whether chain facilities are in-state- or out-of-state-owned, in addition to size, payer mix, and case mix. PRINCIPAL FINDINGS. Behavioral differences among nursing home ownership types in respect to patient care costs tended to distinguish government-owned and hospital-based facilities from the freestanding homes rather than the usual distinction between for-profit and not-for-profit classes. Variables traditionally included in nursing home cost studies, such as size, occupancy, payer mix and case mix, were found to have similar effects on per diem patient care costs for freestanding non-profit homes as well as for chain proprietary facilities. With regard to the effects of ownership change on per diem plant and per diem patient costs, however, there are few differences among ownership types. Chain and non-chain for-profit facilities, non-profit homes, and hospital long-term care units that had changed ownership reported significantly higher per diem plant costs than facilities without a change of ownership, but did not spend more on patient-related costs. Michigan Medicaid plant reimbursement system policy changes instituted in 1985 to promote continued ownership of facilities were not entirely successful. CONCLUSIONS. Non-profit homes look increasingly like their for-profit counterparts with respect to spending on patient care costs. Increased competition for the more lucrative private-pay patients, coupled with declining state Medicaid reimbursement to nursing homes, may have blurred the historical distinctions between the non-profit and for-profit sectors in the nursing home industry. An exception to increasing homogeneity within the nursing home industry is the tendency of proprietary homes to experience more frequent changes of ownership, which results in higher capital costs passed on to state Medicaid programs. Findings from this study indicate that while facility sales increase per diem plant costs, they do not result in increased spending for direct patient care, suggesting that state Medicaid programs may be indirectly subsidizing facility sales with no accompanying increase in expenditures for patient care. To discourage frequent facility sales, state Medicaid programs may need to consider alternative methods of reimbursing nursing home owners for capital costs.     

Experience of a Medicaid nursing home entry cohort.

Long-term care cost-containment policies have focused on reducing the numbers of persons entering nursing homes. To provide insight and background for such efforts, the authors studied the experience of Medicaid nursing home entry cohorts in three individual States. They found substantial interstate variation in rates of nursing home entry and subsequent patterns of discharge, suggesting the operation of fundamentally different policies for provision of Medicaid nursing home services. Analysis of the cost effectiveness and quality of care implications of these policies may provide guidance for future cost-containment efforts.     

Excess demand, consumer rationality, and the quality of care in regulated nursing homes.

This article investigates whether an empirical basis exists for the hypothesis that nursing homes exploit the irrationality of some nursing home patients by providing inadequate quality care. Evidence from Wisconsin in 1983 shows that violations of the Medicaid certification code in nursing homes are not statistically related to two measures of consumer rationality. Violations are, however, related to a measure of the need to compete for patients, despite the presence of an effective program to enforce these certification standards through fines. Specifically, it is found that, where the bed supply is tight, an additional empty bed in every nursing home in a county is associated with between five and six fewer class C violations (or their equivalent) in every home. This evidence is consistent with the hypothesis that the quality problems that nursing homes have traditionally exhibited are linked to the absence of a need to complete for patients, created by the bed shortage conditions that continue to characterize a large portion of nursing home care markets in the United States. The implications for public policy are discussed.     

Does investor-ownership of nursing homes compromise the quality of care?

Quality problems have long plagued the nursing home industry. While two-thirds of U.S. nursing homes are investor-owned, few studies have examined the impact of investor-ownership on the quality of care. The authors analyzed 1998 data from inspections of 13,693 nursing facilities representing virtually all U.S. nursing homes. They grouped deficiency citations issued by inspectors into three categories ("quality of care," "quality of life," and "other") and compared deficiency rates in investor-owned, nonprofit, and public nursing homes. A multivariate model was used to control for case mix, percentage of residents covered by Medicaid, whether the facility was hospital-based, whether it was a skilled nursing facility for Medicare only, chain ownership, and location by state. The study also assessed nurse staffing. The authors found that investor-owned nursing homes provide worse care and less nursing care than nonprofit or public homes. Investor-owned facilities averaged 5.89 deficiencies per home, 46.5 percent higher than nonprofit and 43.0 percent higher than public facilities, and also had more of each category of deficiency. In the multivariate analysis, investor-ownership predicted 0.679 additional deficiencies per home; chain-ownership predicted an additional 0.633 deficiencies per home. Nurse staffing ratios were markedly lower at investor-owned homes.     

Effect of prospective reimbursement on nursing home costs.

OBJECTIVE. This study evaluates the effect of Maine's Medicaid nursing home prospective payment system on nursing home costs and access to care for public patients. DATA SOURCES/STUDY SETTING. The implementation of a facility-specific prospective payment system for nursing homes provided the opportunity for longitudinal study of the effect of that system. Data sources included audited Medicaid nursing home cost reports, quality-of-care data from state facility survey and licensure files, and facility case-mix information from random, stratified samples of homes and residents. Data were obtained for six years (1979-1985) covering the three-year period before and after implementation of the prospective payment system. STUDY DESIGN. This study used a pre-post, longitudinal analytical design in which interrupted, time-series regression models were estimated to test the effects of prospective payment and other factors, e.g., facility characteristics, nursing home market factors, facility case mix, and quality of care, on nursing home costs. PRINCIPAL FINDINGS. Prospective payment contributed to an estimated $3.03 decrease in total variable costs in the third year from what would have been expected under the previous retrospective cost-based payment system. Responsiveness to payment system efficiency incentives declined over the study period, however, indicating a growing problem in achieving further cost reductions. Some evidence suggested that cost reductions might have reduced access for public patients. CONCLUSIONS. Study findings are consistent with the results of other studies that have demonstrated the effectiveness of prospective payment systems in restraining nursing home costs. Potential policy trade-offs among cost containment, access, and quality assurance deserve further consideration, particularly by researchers and policymakers designing the new generation of case mix-based and other nursing home payment systems.     

Younger Individuals Increase Their Use of Nursing Homes Following ACA Medicaid Expansion

ObjectivesThis study examines the effect of Medicaid eligibility expansion under the Affordable Care Act (ACA) on the utilization of nursing home services by younger individuals and those covered by Medicaid.DesignCompared the age of nursing home residents, proportion of individuals covered by Medicaid, annual nursing home admissions in those younger than 65, and nursing home length of stay in states that expanded Medicaid eligibility through the ACA to states that did not. We used data from LTCFocus (nursing home level), the Minimum Data Set (individual level), and Medicaid expansion status from the Kaiser Family Foundation.Setting and ParticipantsThe study included 15,005,888 nursing home admissions, 2,446,950 of which were residents younger than 65, across 14,132 nursing homes between 2009 and 2016.MethodsA time-varying difference-in-difference model including state and year fixed effects with effect modification by pre-2014 nursing home occupancy.ResultsFacilities in expansion states with a pre-ACA occupancy rate of more than 70% increased the fraction of residents younger than 65 by 2.74% to 6.32%, compared with similar facilities in nonexpansion states. Medicaid admissions varied, with an increase in year 2 after expansion compared with nonexpansion states. Among residents entering from an acute care hospital, the proportion younger than 65 increased in facilities with pre-2014 occupancy rates of more than 70%, compared with similar facilities in nonexpansion states, an increase of up to 6.51%. Median nursing home length of stay for individuals younger than 65 decreased relative to nonexpansion states across all occupancy categories, ranging from 1.68 to 6.06 days after Medicaid expansion.Conclusions and ImplicationsMedicaid expansion increased access to nursing home post-acute care for individuals younger than 65. It remains unclear if the benefit of post-acute care is the same among this group, or if the needs of younger individuals can be adequately met in this setting.     

Health care cost containment measures and mortality in Hennepin County''s Medicaid elderly and all elderly.

In Minnesota, several health care cost containment measures occurred about the time Medicare's Prospective Payment System (PPS) was implemented. These included a moratorium on additional nursing home beds, preadmission screening of nursing home applicants, and rapid growth in HMO (health maintenance organization) enrollment by Medicare recipients. Hospital days per elderly Medicaid recipient decreased by 38 percent for those in nursing homes and by 35 percent for those not in nursing homes from 1982 to 1984. By 1986, hospital days per recipient had decreased 53 and 55 percent, respectively, from the 1982 level. Age-adjusted mortality rates for elderly Medicaid nursing home residents for the period 1977 through 1986 showed an increasing trend after 1982. Estimated age-adjusted mortality rates for the entire County population, which had decreased steadily from 1970 to 1982, rose significantly above the projected rate in 1984, 1985, 1986, and 1987. We conclude that, coincident with the institution of the PPS and other health care cost containment measures, use of hospital care has fallen for all elderly Medicaid recipients, age-adjusted mortality rates among those in nursing homes have increased, and the mortality rate trend for the total Hennepin County elderly population has stopped declining.     

Estimating "reasonable cost" of Medicaid patient care using a patient-mix index.

A multiple regression method of defining "reasonable cost" for Medicaid reimbursement of nursing home patient care was implemented in Washington State in July 1978. A patient-mix index, the Katz ADL (Activities of Daily Living), was included in the regression equation as one of the independent variables to allow systematically for individual patient characteristics and needs in the rate-setting method. From the six measures investigated, the Katz ADL index was selected as the best predictor of patient care per patient-day cost. The way a "reasonable cost interval" of patient care per patient-day was established for each of 277 providers is described. Evidence is presented that this statistical rate-setting method contained efficiency incentives. The potential usefulness of such methods in obtaining management information at low cost should be given more consideration in efforts to reduce administrative costs of governmental health care programs, thus allocating scarce resources to patients on an equitable basis.     

The public health issues in nursing home care

Characteristics of patients in nursing homes and the nursing homes in the United States are reviewed. Issues concerning the selection of right nursing home for the right patient are discussed in the context of measuring the needs of the patient, describing the environment of the home, and involving the patient and family in the selection process so that the best patient-environment mix can be obtained. The major issues after nursing home placement relate to quality and cost of care. The problems in measuring quality of care in the nursing home are addressed, and a goal-attainment model is proposed for both quality assessment and cost containment. Examining alternatives to nursing home care and encouraging research into diseases that lead to placement in nursing homes are seen as high priority goals in the field.     

Analysis of nursing home use and bed supply: Wisconsin, 1983.

This article presents evidence that in 1983 excess demand was a prevailing characteristic of nursing home care markets in Wisconsin, a state with one of the highest bed to elderly population ratios. It further shows that excess demand is the source of at least three types of error in use-based estimates of the determinants of the need for nursing home care. First, if excess demand is present, estimates of the determinants of Medicaid use may simply represent a crowding out of Medicaid patients, driven by the determinants of private use. As a result, factors associated with greater overall need in an area will be correlated with fewer Medicaid patients in nursing homes, ceteris paribus. Second, estimates of the substitutability of home health care for nursing home care may be misleadingly insignificant if they are based on the bed supply-constrained behavior of Medicaid-eligible subjects. Third, because the determinants of bed supply become the determinants of overall use under excess-demand conditions, the determinants of use will reflect, to some extent, the nursing home's desire for profits. Because profitability considerations are reflected in use based estimates of need, these estimates are likely to be misleading.     

Hospital back-up days: impact on joint Medicare and Medicaid beneficiaries

In this article the question of whether nursing home market characteristics affect the ability of hospitals to discharge patients to nursing homes is examined. Also examined is the question of whether joint Medicare and Medicaid beneficiaries have a more difficult time being placed than do other patients. The principal conclusions are first, that the nursing home bed supply and the type of Medicaid payment system affect the ability of hospitals to discharge patients to nursing homes. Joint Medicare and Medicaid beneficiaries have a more difficult time being placed in nursing homes in States with fewer beds and more restrictive Medicaid payment policies, and joint beneficiaries do not appear to have longer stays in hospitals. Rather, they have a greater likelihood of being discharged to home.     

Cost analysis of the Ohio nursing home industry.

This study was part of a major review of long-term care policy in the state of Ohio. The authors analyzed 1532 cost reports filed by nursing homes in 1975-1976 with the Ohio Medical Assistance (Medicaid) program. The objective was to guide policy on size (economies of scale), ownership, certification status, and reimbursement. Economies of scale were not found important: skilled nursing facilities (SNFs) offered the only evidence of operation below optimal scale, and the savings attributable to achieving optimal scale (increasing average bed size from 108 to 143) amounted to only $0.20 per patient day. Proprietary facilities were consistently less costly than voluntary or governmental facilities; however, quality measures were not available, and the largest cost differential was in direct cost where quality might be affected. Hypothesized greater efficiency in proprietary facilities could not be rejected--if accurate, the cost savings were very large ($3.92 to $9.14 per patient day for all homes together). As expected, skilled facilities were more costly than intermediate care facilities (ICFs), and the differential ($3.31 per patient day) was large enough to suggest transfer of misplaced patients. High proportional Medicaid utilization of a home tended to reduce cost, possibly because of the very low ceiling rates paid by the Ohio Medicaid program during the period of this study (1975-76 data). High utilization in general reduced average cost, presumably by spreading fixed cost.     

Senile dementia: public policy and adequate institutional care

Increasing costs of institutional care for the aged have occasioned a variety of government cost containment measures. People with senile dementia of the Alzheimer's type (SDAT) will be the principal group to suffer from cutbacks. SDAT patients are usually eligible for Intermediate Care Facilities (ICFs), rather than Skilled Nursing Facilities (SNFs) and therefore for lower reimbursement. Because such patients require heavy care and are the ones most likely to be Medicaid-dependent, nursing homes are being provided with incentives to prevent admissions. At the same time, community services to aid overburdened caregivers are grossly inadequate. Costs to other parts of the health systems are increased by backups in acute hospitals when nursing home beds cannot be found. SDAT and Medicaid eligibility are the principal causes of such "administratively necessary" backup days, but in the main Diagnostic Related Groups (DRGs) may close even that temporary resource. Thus, virtually all avenues of care are shrinking for those who need them most.     

Perceptual measures of quality: a tool to improve nursing home systems

Improvements in nursing home efficiency and quality typically have not addressed the needs of the entire customer base. The focus of most quality measures used in a health care setting is "technical," and perceptual or patient and family perspectives have been neglected. Data obtained from a survey of customers using services from a chain of nursing homes measured perceptual quality; the data are presented here in a variety of formats that may aid management in organizing and understanding better such information. The goal is to provide management with a tool to identify current strengths, as well as those areas needing attention. If nursing homes are operated without knowledge of perceptual quality data, their improvement efforts are unlikely to adequately address the needs of all their customers.     

Medicare and Medicaid: conflicting incentives for long-term care

The structure of Medicare and Medicaid creates conflicting incentives regarding dually eligible beneficiaries without coordinating their care. Both Medicare and Medicaid have an interest in limiting their costs, and neither has an incentive to take responsibility for the management or quality of care. Examples of misaligned incentives are Medicare's cost-sharing rules, cost shifting within home health care and nursing homes, and cost shifting across chronic and acute care settings. Several policy initiatives--capitation, pay-for-performance, and the shift of the dually eligible population's Medicaid costs to the federal government--may address these conflicting incentives, but all have strengths and weaknesses. With the aging baby boom generation and projected federal and state budget shortfalls, this issue will be a continuing focus of policymakers in the coming decades.     

Incentive regulation of nursing homes

A social experiment was conducted in San Diego to test the effectiveness of monetary incentives in improving the health of nursing home residents and lowering Medicaid expenditures. Use of a Markov model to represent the resulting health changes of nursing home residents shows that the monetary incentives had beneficial effects on both the quality and the cost of nursing home care. Moreover, the nursing homes admitted more people with severe disabilities, and the average length of their stays was shortened. If implemented, this kind of incentive program would save Medicaid substantial amounts of money, but not through lowering nursing home payments. Instead, the more efficient use of nursing homes would transfer more people out of hospitals and thereby save unnecessary hospital reimbursement.