The relationship of Medicaid payment rates, bed constraint policies, and risk-adjusted pressure ulcers

Health Services Research, August, 2004 by David C. Grabowski, Joseph J. Angelelli

Using the MDS, a risk-adjusted facility-level indicator of quarterly pressure ulcer incidence (new or unresolved from the previous quarter) was created. The denominator for the incidence indicator included all residents who had resided in a facility for at least ninety days. We selected the assessment closest to the midpoint of the third quarter in 1999 (excluding admission and readmission assessments). We limited the denominator to residents at "high risk" for a pressure ulcer. High-risk individuals were defined as those with either bed mobility or transferring problems (i.e., requiring extensive assistance or total dependence), those with secondary diseases related to malnutrition (ICD-9 codes = 260,262,263), those who are comatose, or those who have an end-stage disease. By identifying individuals based on these factors, we account for those risk factors associated with pressure ulcer development. Because these risk factors are largely independent of facility treatment practices, we also minimize the potential for over adjustment. Other factors potentially associated with pressure ulcer development (e.g., restraint use, having a history of unresolved pressure ulcers) were not used to characterize high-risk residents because they are reflective of facility treatment practices. Individuals were excluded from the denominator if they had a Stage 4 pressure ulcer (the most severe kind) on their baseline assessment from the previous quarter.

In total, 38.5 percent of residents (or 521,498 residents overall) were included within the denominator of this study. Within this population, 57,299 pressure ulcers (Stages 1 through 4) were observed for an overall high-risk pressure ulcer incidence rate of 10.99 percent and a facility-level average incidence rate of 11.09 percent.

The key independent variable of interest in the analyses was the Medicaid payment rate. Rather than including a facility-level payment rate, which may be endogenous to a facility's quality level, the analysis uses the average rate for the state. If the state deals in aggregates (policing for bad homes aside), no individual home can affect the state's payment rate. Thus, to the individual home, the average state Medicaid rate is exogenous. There is considerable cross-state variation in the level of Medicaid payment. The mean Medicaid rate was $94.34 with Arkansas having the lowest payment rate at $61.98 and Alaska having the highest payment rate at $253.48. Importantly, the exclusion of those three states with the lowest and highest Medicaid payment rates did not qualitatively change the results presented below.

A series of state-level dummy variables were also included to represent other aspects of Medicaid payment systems. States broadly employ one of four reimbursement methodologies--prospective, combination, flat rate, or a retrospective system of reimbursement. Additionally, states may employ a case-mix payment system or allow an upward adjustment in their prospective rates based upon cost information that becomes available during the rate period.