The Effect of State Medicaid Case‐Mix Payment on Nursing Home Resident Acuity

Abstract

Objective. To examine the relationship between Medicaid case‐mix payment and nursing home resident acuity. Data Sources. Longitudinal Minimum Data Set (MDS) resident assessments from 1999 to 2002 and Online Survey Certification and Reporting (OSCAR) data from 1996 to 2002, for all freestanding nursing homes in the 48 contiguous U.S. states. Study Design. We used a facility fixed‐effects model to examine the effect of introducing state case‐mix payment on changes in nursing home case‐mix acuity. Facility acuity was measured by aggregating the nursing case‐mix index (NCMI) from the MDS using the Resource Utilization Group (Version III) resident classification system, separately for new admits and long‐stay residents, and by an OSCAR‐derived index combining a range of activity of daily living dependencies and special treatment measures. Data Collection/Extraction Methods. We followed facilities over the study period to create a longitudinal data file based on the MDS and OSCAR, respectively, and linked facilities with longitudinal data on state case‐mix payment policies for the same period. Principal Findings. Across three acuity measures and two data sources, we found that states shifting to case‐mix payment increased nursing home acuity levels over the study period. Specifically, we observed a 2.5 percent increase in the average acuity of new admits and a 1.3 to 1.4 percent increase in the acuity of long‐stay residents, following the introduction of case‐mix payment. Conclusions. The adoption of case‐mix payment increased access to care for higher acuity Medicaid residents.