Chapter 4_What Tools Exist for Policy Makers to Raise Quality

What Tools Exist for Policy Makers to Raise Quality? Looking at state memoranda and the empirical literature on nursing home quality it is clear that a wide range of macro and microeconomic policy levers exist in addition to the federal system of fines, payment denials, temporary loss of managerial control, and Medicaid/Medicare contract terminations. This next section will include a review of five of those policy tools. Construction Moratoriums In short, certificate-of-need laws (CON Laws) are a policy tool used by states to limit the growth of new providers, promote competition, and constrain public spending. Since the 1980’s certificate of need laws and moratoriams on new construction have been used widely to constrain the growth of the nursing home and home health sector. At this time it seems that the evidence to support the intended impact of con laws on public spending and quality is not there. ​Grabowski et al. (2003) examined the change in Medicaid nursing home expenditures in states that repealed their con laws over the 1981-1999 period. During this period, 16 states repealed their con nursing home laws for some period of time, 25 imposed moratoria on new nursing homes, and 10 states repealed their con programs without imposing a moratorium. Grabowski et al.(2003) concluded that at most the repeal of con laws between 1981 and 1999 resulted in an average of a 3% increase in state Medicaid Nursing Home expenditures and a 2.5% increase in Medicaid long-term care expenditures. However, this result was not statistically significant (p.152). Focusing on a somewhat later period, Rahman et al. (2016) used longitudinal data from 1992 to 2009 to examine trends in Medicaid and Medicare spending in states with a con law in place. More specifically this study compared the growth in Medicare and Medicaid spending on Nursing Home and Home Health Care in 44 states, 34 of which had con laws in place, and 10 of which did not. Of the 34 which had CON laws, 19 had only Nursing Home CON, and 15 had both nursing home and home health CON laws. What Rahman et al. found was over the study period nursing Home CON laws were not effective for constraining the growth of Medicaid and Medicare expenditures in the way policymakers would expect. In fact, states with Nursing Home CON laws Medicare spending for short-stay post-acute care grew faster than in those without such laws in place. Also unexpected, over the study period, Medicaid spending on long-stay nursing home care declined at a slower rate in states with CON Laws when compared to those without. However, spending on home health care by both Medicare and Medicaid increased at a much faster rate in states without CON (Rahman, et al, 2016, p. 9). Finally, a study by Ferdows et al. (2020) adds complexity to the understanding of potential unintended impacts of CON laws on market structure. Ferdows et al. (2020) compare trends in the structural characteristics, of the nursing homes in the 34 states that always had CON and 10 states that never had CON from 1992 to 2017. More specifically the authors looked for differences in how, nursing home size, payer mix, and staffing ratio changed over the study period under the different regulatory conditions of no con laws, both nursing home and home health con laws, and nursing home con law only. Most notably the authors found that in states with both nursing home and home health

con laws the average nursing home added 6 beds. Meanwhile, the average nursing home in states without con law lost 2 beds over the study period (p. 2). Furthermore, the authors found that states with CON laws in place, increased their share of Medicare-paid patients at a faster rate when compared to no-CON states. Lastly, the authors found the state count of registered nurses to nurses declined initially until the late 2000s, with Home Health CON states showing the fastest rate of decline up until year 2000 and the slowest rate of growth after year 2000 (p.2). Using the above observations, Ferdows et al. (2020) assert that “that barriers to entry might have provided market power for the existing nursing homes in states with home health CON.”(p. 2). All in all there does not seems to much clear evidence that CON laws are an effective tool for constraining the growth of the nursing home industry or limiting Medicare and Medicaid expenditures for nursing home care. Community and Homebased Alternatives Home and Community Based long-term care options are services, usually provided through the state Medicaid program, including assistance with activities of daily living, rehabilitative therapy, and some medical services. In many cases home and community-based service programs are offered as an alternative for individuals who require a lower level of care than provided in a nursing facility. However, pathways are available at the option of the state to provide home-based services, as a direct substitute for institutional care. The state of Maryland offers a wide variety of Home and Community-Based Services that may be able to substitute for institutional long-term care in a nursing home. The available literature assessing the clinical effectiveness and cost of Home and Community based long-term care programs show that these efforts can be successful in keeping medical frail and complex persons out of long-term care institutions. Levy & Whitfield (2019) investigate the cost and mortality benefits of the VA Medical Foster Home community based long-term care alternative as compared with community nursing homes. Based on the results of the study, the authors conclude that the Medical Foster Home model has promise as a budget-neutral option to community-based nursing home care, with mortality benefits. Focusing on a different model of care, Valluru et al. (2019) use 2012-2015 data on patients receiving home-based primary care through the Independence at Home Demonstration project. The Independence at Home Demonstration “tests a service delivery and payment incentive model that uses home-based primary care teams designed to improve health outcomes and reduce expenditures for Medicare beneficiaries with multiple chronic conditions (The Center for Medicare and Medicaid Services.h. 2019). The results of this study show, that patients receiving care coordinated by one the three Mid Atlantic Consortium sites which integrated community support services with home-based primary care had a reduced rate of Long-term institutionalization when compared to patients of similar frailty who were not receiving their care through a MAC site (p. 5).

Consumer Report Cards ( Nursing Home Compare) Beginning in October 1998 the Centers for Medicare and Medicaid has operated a consumer reporting platform,​ N​ ursing Home Compare​. Nursing Home Compares allows users to search federally certified nursing facilities in their area by, city, state, or zip code. Since 2008 Nursing Home Compare has issued each nursing home a 1,2,3,4, or 5 ratings on three dimensions of quality, health inspections, staffing, and quality measures, as well as on an overall composite rating (The Kaiser Family Foundation, 2015). In all cases except the health inspections rating, CMS pre-determines cutpoint scores as way to assign stars. In the case of the health inspection rating, facilities earn stars based on their relative performance other facilities in the state (The Centers for Medicaid & Medicare Services.a., 2020, p. 2-18). In addition to star ratings, which can be used to assess facility quality, NHC offers a wealth of information about each facility including the number of certified beds, its Medicare and Medicaid certification status, wether the facility has been issued and fine or payment denials in the last three years, wether the facility is located in a hospital, is part of a continuing care retirement community, and the ownership classification of the facility. At this time there is some evidence that consumers use the report card to support long-term care decision making, and that they are especially responsive to userfriendly measures of care quality - like those reported in the 2008 website update(​Perraillon et al., 2019).​ That said, questions still remain about the ability of the rating system to capture and report important information such as process measures of patient safety (B​ rauner​ et al., 2018). Finally, Ryskina et al. (2018) raise point that quality ratings may perversely incentivize nursing homes to neglect important areas of quality, for example, limiting the incidence of hospitalization in post-acute care patients in order to allocate resources towards maximizing performance in measured and reported areas. Raise the Medicaid payment rate. Raising the general Medicaid perdiem rate, or offering earmarked Medicaid dollars, to subsidize the cost of specific input to nursing care are both important options to consider. ​ Feng et al. (2010) used a panel of facility-level observations spanning 1996- 2004. The results of this study show that in facilities in states that introduced a Medicaid wage pass-through policy over this time period had on average, a “3.0 and 4.0 percent net increase in CNA hours per patient day in the years following policy adoption”.(p 743). This is a modest result. This observed increase translates into a facility increasing CNA labor so that there is an additional 27–36 minutes of CNA care per patient per week. Relatedly, Foster & Yee et al. (2015) constructed a panel of facility-level observations for the years 1999 - 2004 and compare staffing levels in nursing homes in states with wage pass-through policies to those without. The results of their analysis showed that staffing in nursing homes in states with a pass-through policy increased about 1%, when compared to facilities in states that did not have such, policies in place. In facilites that fell within the bottom quartile of the sample for share of Medicaid patients these policies appeared to

have stronger impact. On average the effect of the wage pass-through policy was a 2.7% increase in staffing on average. Finally, Bowblis & Applebaum (2017) investigate the impact of a Medicaid rate increase in a single state, under the specific condition where facilities knew they would experience either no change, an increase, or a decrease in their Medicaid perdiem rate. Using data on all Federally certified nursing homes in Ohio from 2006 to 2010 Bowblis & Applebaum (2017) investigate the impact on nurse staffing and various measures of quality in nursing homes that had an anticipated increase in their perdiem Medicaid reimbursement rate, verses and anticipated decrease, versus the expectation of no change. The primary finding of this work was that nursing homes that expected no change and those that expected an increase in their reimbursement rate, raised staffing levels. Meanwhile, those that anticipated a decrease in reimbursement levels decreased staffing levels. Notably none of these results were statistically significant. However, also of note those homes which anticipated an increase in reimbursement experienced a significantly increased housekeeping (0.05 HPRD) and dietitian (0.01 HPRD) staffing levels. By contrast, those facilities that anticipated decreases lowered foodservice staffing levels by 0.07 hours per resident day (HPRD) (B​ owblis & Applebaum, p. 1741). Offering Financial Incentives to High Performing Facilities (Pay for Performance) Value-based purchasing is an incentive program that increases or decreases the perdiem rate paid to federally certified nursing homes for all Medicare Part A hospital claims. In 2014 the Protecting Access to Medicare Act (PAMA; P.L. 113-93) legislated that a nursing home value-based purchasing program be established, and be operational by October 1, 2018 (Scott, 2016; the Centers for Medicare and Medicaid Services, 2020). U​ nder this program, each nursing facility is evaluated based on the number of unplanned hospital readmissions per year, which occur within 30-days after a patient was discharged from a prior hospitalization to the SNF (The Centers for Medicare & Medicaid Services, 2020). C​ urrently, Medicare value-based-purchasing is a mandatory performance incentive, applied to all federally certified nursing facilities which treat post-acute short-stay Medicare payers and submit Medicare Part A hospital insurance claims. Closing Thoughts Incentivizing a sufficient and high quality supply of skilled nursing home care for everyone who needs it has always been a challenge within the U.S. economy. Comparing the provision of publicly financed nursing home care in 2020, to publicly financed elder care 1935 yields several notable and positive differences. First, there exists plenty of physical capacity (nursing facilities) to provide this care. Second, the U.S. legal system has codified a robust, regulatory infrastructure. Finally, the public and interested public officials have managed to keep the funding and regulation of a sufficient supply of high quality of skilled long-term care on the policy agenda long-enough for a wealth of policy mechanisms to be developed and disseminated,

and evaluated. Unfortunately, despite these positive gains many facilities still struggle to provide truly safe environments for patients.