Alternative Headline: Subsidies Boost Staffing, Shift Patients
[MM Curator Summary]: Medicaid payroll subsidies raised nursing home staffing but reduced Medicaid patient access as facilities shifted toward Medicare and private-pay residents.
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Five states that used payroll subsidies to drive nursing home staffing increases succeeded, but they also saw nursing homes fill more of their beds with Medicare patients during the same period.
That’s the finding of a new study examining the role of rate add-ons tied to Medicaid census over 13 years.
“Subsidies did in fact induce nursing homes to substantially increase their staffing levels, with the average nursing home increasing their number of direct care worker minutes per resident-day by 7.4%,” Thomas A. Hegland, a senior health and labor economist with the Agency for Healthcare Research and Quality, reported in a study published online ahead of September’s edition of the Journal of Health Economics.
That equated to just over 10 minutes more of per resident-day staffing for each additional dollar of per-resident day subsidies offered in 2010.
But even though the size of the subsidies was linked to the share of Medicaid residents present in a facility, many nursing homes still reduced new Medicaid admissions in favor of “more lucrative” Medicare-covered and private pay patients.
Each additional dollar in subsidies decreased the Medicaid share of new nursing home admissions by about 1.8 percentage points. Across five states with varying rate add-ons, that led to an 11.5% decrease over the study window.
“This appears to have been part of a broader shift where subsidy-receiving nursing homes increased their patient turnover rates and shifted toward serving patients with lower overall care needs,” Hegland wrote.
He noted that nursing homes in states with Medicaid payroll subsidies also took on more patients requiring less care, with Activities of Daily Living index scores falling by 2.5% relative to pre-subsidy scores. The states reviewed were not named in an abridged copy of the study reviewed by McKnight’s Long-Term Care News.
In recent years, more states have considered or implemented Medicaid rate add-ons for quality measure performance or speciality care such as behavioral health.
But Hegland said policymakers should be aware of the unintended consequences revealed in his study and consider whether the same could occur when adopting other incentives meant to improve quality. He predicted similar reductions in Medicaid patient access could happen where nursing homes face “a substantial gap between Medicaid and other insurers’ payment rates” and when nursing homes are operating at high occupancy levels.
“While nursing home payroll subsidies can be effective tools for increasing nursing home staffing levels and, hopefully thereby, care quality, the broader context of the relatively unique institutional environment in which nursing homes operate can cause nursing homes to respond to the subsidies in a fashion that potentially reduces access to nursing home care among Medicaid enrollees,” he wrote.
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