Has the Medicare prospective payment system led to increased nursing home efficiency?
OBJECTIVE
To assess the impact of recent Medicare prospective payment system (PPS) changes on efficiency in skilled nursing homes.


METHODS
Medicare Cost Reports (MCR), On-line Survey Certification and Reporting System (OSCAR), Area Resource Files (ARF), a Centers for Medicare and Medicaid Services (CMS) hospital wage index website, a Consumer Price Index (CPI) database, and a survey of state Medicaid reimbursement rates. The sample was 8,361 nursing homes in the Medicare Cost Report databases from the years 1997 to 2003.


METHODS
Data-envelopment analyses (DEA) calculated efficiency scores for three separate DEA models: unadjusted, acuity-adjusted, and acuity-and-quality-adjusted efficiency. The efficiency scores from these models were regressed on the Medicare PPS changes (the Balanced Budget Act [BBA], the Balanced Budget Refinement Act [BBRA] and the Benefits Improvement and Protection Act) and other organizational and market explanatory variables using a panel-data truncated regression.


RESULTS
Mean values for all efficiency measures decreased over time, the acuity-quality-adjusted efficiency measures decreasing the most. All policy variables were significantly negatively related to all efficiency measures. Higher nurse staffing was negatively related to efficiency in all but the acuity-quality-adjusted model. Other explanatory variables varied in their relationships to the efficiency variables.


CONCLUSIONS
The results suggest that the reimbursement policy changes had a significantly negative impact on efficiency. Higher nurse staffing contributed to lower efficiency only when efficiency was not adjusted for quality. Various organizational and market factors also played significant roles in all efficiency models.
Zhang
Ning Jackie
NJ
Doctoral Program in Public Affairs, College of Health and Public Affairs, University of Central Florida, Orlando, FL, USA.
Unruh
Lynn
L
Wan
Thomas T H
TT
D019992:Databases as Topic; D017598:Efficiency, Organizational; D005069:Evaluation Studies as Topic; D008137:Longitudinal Studies; D006278:Medicare / Q000191:economics*; D011445:Prospective Payment System / Q000639:trends*; D012866:Skilled Nursing Facilities / Q000458:organization & administration / Q000592:standards*; D014481:United States