The effects of Medicaid reimbursement method and ownership on nursing home costs, case mix, and staffing

Abstract

In this study we analyze the effects of ownership and Medicaid cost containment initiatives on nursing home costs, payer mix, case mix, and staffing, using 1981 Medicare cost reports and Medicare/Medicaid Automated Certification files. As Medicaid cost containment incentives become stronger, nursing homes respond by decreasing case mix and commensurately decreasing staffing. When these incentives are especially strong, staffing is reduced beyond the apparently appropriate level, given the case mix. In addition, while chain facilities have lower costs than other types of facilities, these lower costs do not appear to come from either increased cream-skimming or reduced staffing levels.