State Medicaid nursing home reimbursement rates: adjusting for ancillaries.
OBJECTIVE
State variation in inclusion of ancillary services in daily Medicaid nursing home reimbursement rates, versus covering ancillary costs outside of such rates, makes rate comparisons difficult. The purpose of this study is to adjust for inclusion of ancillaries when comparing Medicaid rates across states.


METHODS
Data for 1987-1998 were drawn from a national survey of Medicaid reimbursement. Employing a random-effects model, the PANEL option in the LIMDEP software was used to estimate effects on state average Medicaid nursing facility constant-dollar rates of the inclusion in those rates of a set of ancillaries: physical therapy, occupational therapy, prescription drugs, nonprescription drugs, durable medical equipment (DME), medical supplies, and physician services.


RESULTS
Rates averaged higher when they included occupational therapy, physician services, nonprescription drugs, and both DME and medical supplies. Adjusting for the inclusion of ancillaries leads to a much different ranking of states than for unadjusted rates.


CONCLUSIONS
Public and industry policy makers should consider the inclusion of ancillaries in rates when considering the relative adequacy of rates across states.
Swan
J
J
Department of Public Health Sciences, Wichita State University, Kansas 67260-0152, USA. swan@chp.twsu.edu
Bhagavatula
V
V
Algotar
A
A
Seirawan
M
M
Clemeña
W
W
Harrington
C
C
D000368:Aged; D004389:Durable Medical Equipment / Q000191:economics*; D006291:Health Policy; D006707:Homes for the Aged / Q000191:economics*; D006801:Humans; D008484:Medicaid / Q000191:economics*; D009735:Nursing Homes / Q000191:economics*; D010548:Personal Health Services / Q000191:economics*; D010593:Pharmaceutical Services / Q000191:economics*; D011907:Rate Setting and Review; D012044:Regression Analysis; D012046:Rehabilitation / Q000191:economics*; D012051:Reimbursement Mechanisms; D013221:State Health Plans; D014481:United States