Does prospective payment really contain nursing home costs? - Policy Impact - Statistical Data Included

Health Services Research, April, 2002 by Li-Wu Chen, Dennis G. Shea

NOTES

(1.) The only exceptions are some demographic variables created from the ARF. Because the 1994 information for these variables is not available in the ARF, data from 1989 and 1990 were used as proxy information.

(2.) A SNF provides care to patients with a higher level of acuity and a NF provides care to patients who need custodial care. Because the great majority of nursing homes (73.2 percent) in the United States are certified both as a Medicare SNF and as a Medicaid NF (MEPS 1996), we did not separate SNFs from NFs in the analysis.

(3.) A number of facilities were dropped from our sample because they did not have complete cost information for the entire period of the 1994 calendar year. The reason for this was that cost data were reported based on fiscal-year schedule so that some facilities ended (or began) their reporting before December 31, 1994 (or after January 1, 1994). We did a series oft tests on the means of variables between our analytic sample (n = 4,635) and the excluded sample (n = 5,387). The results show that facilities from both samples had no statistically significant difference (p < 0.05) in their patients' case mix and two quality indicators (prevalence of physical restraint and drug error rate), although the other quality variables were significantly different across these two samples. In addition, the analytic sample had a significantly greater proportion of metropolitan-located, free-standing, and for-profit facilities than the excluded sample did. However, the disparity was reduced when the analytic sample was com pared with the national sample (n = 16,840) from the 1996 MEPS. In general, the analytic sample was more representative of nursing homes across the nation than the excluded sample was.

(4.) We would like to express our appreciation for the permission to use these 1994 state Medicaid payment method data from Dr. James H. Swan and Dr. Charlene Harrington.

(5.) The detailed results of the factor analysis are available from the authors by request.

(6.) To test the validity of the constructed structural quality measures (e.g., care-related staff ratio), which were obtained by adding up multiple individual personnel ratios (e.g., RNs, LPNs) based on the factor analysis results, we ran another cost function regression using all individual staff ratios (results are available from the authors by request). There is no significant difference in the results between the model using constructed variables and the model using individual staff variables.

(7.) There might be some variation in the strictness of law enforcement on the quality violations of nursing homes among states. This variation may impose measurement errors on this variable. Therefore, the number of regulatory deficiencies of each facility was divided by the mean of facility deficiencies of the state where this facility is located. The resulting measure was used in the regression analysis to adjust for state variation.

(8.) The weighting value 2 was assigned to those patients who are totally dependent on other people's assistance for any of the five ADLs, and the weighting values 1 and 0 were assigned to those patients who need partial assistance and no assistance at all, respectively. For instance, if 40 percent and 30 percent of patients in a facility are totally and partially, respectively, dependent on others for the act of eating, then the ADL-specific score for eating for this facility is (0.4)(2) (0.3)(1) (0.3)(0) = 1.1. This calculation was repeated for every ADL and for each facility.