title: The resource utilization group system: its effect on nursing home case mix and costs.
abstract: Using data from 1985 and 1986, we examine how New York state's prospective payment system affected nursing homes. The system, called Resource Utilization Group (RUG-II), aimed to limit nursing home cost growth and improve access to nursing homes by "heavy-care" patients. As in Medicare's prospective hospital reimbursement system, payments to nursing homes were based on a "price," rather than facility-specific rates. With respect to cost growth, we observed considerable diversity among homes. Specifically, those nursing homes most financially constrained by the RUG-II methodology exhibited the slowest rates of cost growth; we observed higher cost growth among the homes least constrained. This higher rate of cost growth raises a question about the desirability of using a pricing methodology to determine nursing home payment rates. In addition to moderating cost growth, we also observed a significant change in the mix of patients admitted to nursing homes. During the first year of the RUG-II program, nursing homes admitted more heavy-care patients and reduced days of care to lighter-care patients. Thus, through 1986, the RUG-II program appeared to satisfy at least one of its major policy objectives.
authors.affiliation: Department of Health Policy and Administration, School of Public Health, University of North Carolina, Chapel Hill 27599-7400.
authors.forename: K E
authors.initials: KE
authors.lastname: Thorpe
authors.forename: P J
authors.initials: PJ
authors.lastname: Gertler
authors.forename: P
authors.initials: P
authors.lastname: Goldman
mesh_terms: D000368:Aged; D003365:Costs and Cost Analysis; D003953:Diagnosis-Related Groups / Q000191:economics / Q000706:statistics & numerical data*; D006297:Health Services Accessibility / Q000706:statistics & numerical data; D006801:Humans; D008134:Long-Term Care / Q000145:classification*; D015999:Multivariate Analysis; D009518:New York; D009735:Nursing Homes / Q000191:economics*; D011445:Prospective Payment System / Q000458:organization & administration*; D013221:State Health Plans / Q000191:economics; D014481:United States