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OCR for page 190
7
Issues Requiring Further
Study
There are five sets of issues that need study before
federal policy positions on these issues can be developed
and prescribed: (1) the scope and design of information
systems needed to regulate nursing homes effectively and
to facilitate development of sound policies for long-term
care; (2) policies governing the methods and amounts of
payments to nursing homes for care of residents eligible
for support under the Medicaid program; (3) policies
affecting the supply of nursing home beds in the context
of the growing demand for all types of long-term-care
services; (4) regulatory policies concerning (a) the
training and qualifications of all staff in nursing homes
and (b) minimum staffing patterns needed to provide
adequate care to mixes of residents with varying needs;
and (5) policies governing construction of new nursing
homes, specifically, the proportion of single rooms that
should be required.
190
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ISSUES REQUIRING FURTHER STUDY /191
INFORMATION SYSTEMS
Data About Residents
The introduction of the requirement (recommended in
Chapter 3) for standard assessment data on every resident
will produce a vast body of data about the characteristics
of nursing home residents and how they change while in
nursing homes. These data have potentially major
significance for three purposes: (1) for improving
nursing home management, (2) for improving the effect-
iveness of regulation, and (3) for obtaining essential
information with which to develop more effective and
efficient nursing home regulatory policies, and for
facilitating development of more appropriate long-term
· · .
care policies.
It is a large undertaking to install a national standard
resident assessment system in 15,000 nursing homes that
has the capability of allowing needed information to be
retrieved readily. It involves, among other things,
determining the standard data to be collected and
designing and testing techniques for collecting it
reliably, developing instruction manuals, and training
thousands of people to conduct the assessment routinely
and with reasonable integrity and reliability.
It also involves developing case-mix groupings based on
definitions related primarily to assessment scores, and
developing auditing procedures and the standards to be
used by state auditors to determine whether the error
rates they find are acceptable. With good planning,
adequate resources, and strong, competent leadership, this
set of tasks could be accomplished in 2 or 3 years.
Complex technical and policy decisions are involved in
designing a sound system for gaining access to these data
by computer. The decisions will require careful study and
will take time. Introducing a manual resident assessment
system should not be delayed until this study is
completed. A great many nursing homes now have their own
computers. Some--perhaps many--are likely to enter
resident assessment data into their own computer files so
that they can use it for their own management purposes."
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But a great deal of work would have to be done to
determine how best to use these data to meet both state
and federal government (as well as resident care) needs.
Some questions occur, such as whether all data on all
residents should be acquired by the state regularly or
whether the data should be sampled, and, if so, how, and
how often. These questions can be answered largely by
determining the priority uses to which the data are to be
put--for example, for developing case-mix-controlled
outcome standards for quality assurance purposes, for use
in Medicaid payment decisions, for developing staffing and
other resource algorithms tied to case mix, or for
utilization review. There also are questions of cost,
technical feasibility, privacy, authorized access to and
uses of the data, and a number of other technically and
legally complex and politically sensitive matters.
These questions can and should be resolved. The rapid
advances and decreasing costs of computer technology make
a computerized system for handling resident assessment
data feasible from technical and economic standpoints. A
study should be commissioned by the Department of Health
and Human Services to design the system. Responsibility
for conducting the study should be assigned to a group of
technically competent and broadly knowledgeable people who
are sensitive to the concerns and needs of all interested
parties--the residents, the nursing home operators, state
governments, and the federal government.
Such a study will have implications for the future role
and contents of the National Nursing Home Survey conducted
by the National Center for Health Statistics. This survey
has been the most important source of information on
nursing home residents and care resources. However, its
utility has been limited by its small sample size, long
intervals between surveys (almost 10 years since the last
completed survey), the modest amount of data on the health
and functional status of residents, and absence of
longitudinal data. The recommended study could lead to a
new strategy that would resolve these problems. In this
process, consideration needs to be given to relevant
recommendations of the National Committee on Vital and
Health Statistics for a minimum data set on long-term
care.
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ISSUES REQUIRING FURTHER STUDY /193
Other Data About Nursing Homes
As mentioned in Chapter 1, the committee was impressed
by the paucity of information about nursing homes and
their operations, as well as about regulatory activities
available on both national and state levels. With more
than half of all nursing home revenues coming from public
funds, and with growing demand for nursing homes and other
types of long-term-care services, the need for more infor-
mation seems clear. But moving from that general conclu-
sion to specific decisions on what information should be
collected, how frequently, how it should be done, how it
should be aggregated, analyzed, and made publicly
available, and who should be responsible, is quite another
matter. A study by a technically competent and broadly
knowledgeable group--possibly the same group that is
responsible for studying the resident assessment data
system--should be asked to study the requirements and make
recommendations on how they should be handled.
Recommendation 7-1: The Secretary of HAS should order a
study to design a system for acquiring and using resident
assessment data to meet the legitimate and continuing
needs of state and federal government agencies. The
Secretary also should order a study to determine the needs
for other data about nursing homes that would facilitate
regulation and policy development. This study should
recor''nzend specific ways to collect, analyze, and publish
or otherwise make such data publicly available.
MEDICAID PAYMENT POLICIES
The Medicaid program was originally designed to pay for
health care services for those on welfare and selected
others whose incomes were low and who were"medically
needy" because they had no health insurance. Medicaid
was--and is--perceived at the state and federal levels as
a component of the welfare system. As is true of the
other components of the welfare system, the states are
responsible for administering it under broad federal
guidelines. This means that each state determines who
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shall be eligible for Medicaid, what services it will pay
for, and how (and how much) it will pay the health
professionals and the institutions who provide authorized
services to eligible patients. Medicaid funds are
appropriated annually (or biennially) by state legisla-
tures as are the matching federal funds. The federal
contribution to state Medicaid budgets ranges from 50 to
78 percent. In most states, Medicaid is the second
largest budget item after education and in recent years
has been the fastest growing.2 About 50 percent of
nursing home revenues come from Medicaid. The funds pay
for some or all of the costs of about two-thirds of the
residents.3 In 1984, Medicaid expenditures for
nursing home care totaled about $14 billion.4
Medicaid payment policies--both the methods used to
calculate how much to pay, and the actual rates of
payment--provide strong incentives to nursing home
operators. (Eighty percent of the beds are operated on a
for-profit basis.) Nursing home operators adjust their
operations so that the revenues they receive cover all of
their costs (including capital costs) plus a profit.
Nursing homes can control costs by controlling admissions
(choosing a mix of residents whose needs for care can be
paid for by the revenues they bring in), and by
controlling such variable operating expenses as staffing,
food, laundry, housekeeping, and plant maintenance.
Because Medicaid rates are as much as 30 percent lower
than private rates for comparable residents in some
states, there is a clear incentive to try to attract and
keep as many private-pay residents as possible.
At least six goals have been suggested (or implied) as
appropriate for state Medicaid payment policy. It should
1. control public expenditures for Medicaid:
2. ensure adequate provider participation and access to
care by those eligil~le--or likely to become eligible--for
Medicaid, irrespective of degree of disability;
3. encourage appropriate and high-quality care;
4. deliver service efficiently (provide the maximum
appropriate service per dollar);
5. be administratively simple to implement; and
6. minimize the potential for fraud and abuse.
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ISSUES REQUIRING FURTHER STUDY /195
The committee commissioned a review of the research
literature to ascertain what is known about the effects of
different Medicaid payment policies both on access and
quality of care in nursing homes.5 The findings
suggest that the relationship between quality and payment
policy is highly variable and somewhat unpredictable.
Some facilities provide excellent care at the same payment
rate, and with the same resident mix, as other facilities
in the same geographic area that provide substandard
care. Some rates or payment levels may be insufficient to
provide desirable quality of care and quality of life, but
the distribution of the payment into cost line items
within a facility may have a greater impact on quality
than the amount of the total payment. Furthermore, such
aspects of facility performance as the quality,
motivation, and efficiency of the care-giving staff, and
managerial skill, are not price-sensitive. These
performance characteristics vary greatly across
facilities. Since the relationships among costs, charges,
and quality of care are very complex, simply paying more
is no guarantee of improved quality. In some cases,
paying less (up to a point) need not lower quality. No
studies, however, have adequately investigated the complex
relationships among costs, charges, reimbursement, and
quality.
The fact that the current literature does not show
strong relationships among cost, charges, payment policy,
and quality does not imply that there are no
relationships. Available ways to measure are neither
valid nor reliable. Most studies have measured structure
or process because they were the only known proxies for
quality. It would be desirable to know how the quality of
life (as perceived by the resident) and the quality of the
care (as determined by case-mix-controlled outcomes
compared to national norms) are related to costs.
In sum, there is now no evidence to establish the
superiority of any Medicaid payment policy with respect to
its effects on quality of care. There has been little
systematic evaluation of the impact of different systems,
in part because many have been implemented recently.
Ideally, if a particular approach to Medicaid
reimbursement policy proves to be more successful than
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others in having the desired effects on nursing home
behavior, it should be adopted by all states. Thus, it is
an important area for further federal policy development.
But much additional research is needed and it merits
continued high-priority attention by the HCFA. Research
and demonstrations to test innovative payment systems
should be encouraged. They should include, for example,
all-payer rate setting, to assess its effects on quality
of care and access for heavy care and Medicaid residents.
The research opportunities in these questions will be
enhanced considerably once the standardized resident
assessment data system is in place. It will then become
possible to control for case mix and apply outcome
measures of quality.
DEMAND FOR AND SUPPLY OF
NURSING HOME BEDS
Demand
In most states6 there is evidence of excess demand
for nursing home beds: occupancy rates are well over 90
percent and there are waiting lists at many facilities.
The demographic trends suggest that the demand for the
kinds of long-term care services now being provided mainly
by nursing homes is certain to increase. The number of
persons over 65 is projected to increase from 25.7 million
in 1980 to 36.3 million in 2000, a 41.2 percent increase.
For the over-85 group, the projected increase is 108
percent during this period, from 2.6 to 5.4 million.7
The rapid growth of the population aged 85 and over is
likely to have a significant impact on the size and
structure of the nursing home population.8 If
current age and sex-specific institutionalization rates
hold, the proportion of the residents in nursing homes who
are age 85 and over can be expected to rise from 31
percent in 1980 to 43 percent in 2000. This increase in
the mean age of the nursing home population implies a
greater proportion of heavy-care residents.
Two additional factors may affect demand for nursing
home beds. One is the rate and direction of change in
health status at advanced ages. That is, in addition to
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ISSUES REQUIRING FURTHER STUDY /197
the effects of health status on survival, changes in
health status may directly affect the risk of
institutionalization for the elderly. For example, with
increasing numbers of persons over 85 there may be an
increase in the prevalence of chronic diseases if the
increases in survival are concentrated among chronically
morbid and impaired people. This would increase the
demand for intensive nursing home care. (Alternately, it
may be that the future survivors will be proportionately
healthier than those in the same age group today, and that
projecting current rates will overestimate future
morbidity rates. But there is no evidence to suggest this
is happening.)
Another factor affecting future demand will be increases
in the availability of alternative long-term care
services, perhaps stimulated by the emergence of alter-
native financing patterns, for example, the growth of
private, long-term-care insurance.
Irrespective of the nature and extent of such
developments, the need for nursing home care will not
diminish during the next 15 years. There is no evidence
that either the population's health status (physical,
functional, and mental) will so improve that nursing home
care requirements will decrease, or that other long-term-
care services could be substituted for nursing home care
for the majority of individuals now found in nursing
homes. The population in nursing homes is likely to be
more aged and more disabled, and some form of mental
disability (particularly Alzheimer's disease) is likely to
be more common. But the current pattern of a mix of
residents with different treatment and service needs (that
is, a fairly heterogeneous population) is likely to
continue.
Bed Supply
In most states there are more people seeking admission
to nursing homes than there are beds available. This
excess demand results from three interrelated factors:
(1) There are many individuals now living in the community
WhO are just as disabled as nursing home residents, and
some of them would enter a nursing home if a bed were
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available; (2) to control the costs of the Medicaid
program, some states have sharply constrained or
completely stopped construction of new nursing homes or
expansions of existing nursing homes; (3) in some states
Medicaid reimbursement rates are so low that at current
rates, the marginal cost of treating some (heavy-care)
residents may exceed the reimbursement rate.
The supplier's market for nursing home beds that exists
in most states allows nursing home operators to select
among applicants for beds. Business logic suggests that
they will try to optimize net income by favoring
private-pay over Medicaid-eligible and, generally, the
easier-to-care-for resident over those who are more
difficult (and, therefore, more costly) to care for
properly. However, the latter judgment is affected by
payment policy: if payment for heavier-care residents is
more than sufficient to offset higher costs so that it is
more profitable to admit them than lighter-care residents,
and if adequate staffing to care for such residents is
feasible, heavier-care residents may be given preference
for admission. But there are still likely to be some
types of residents who will be hard to place. A recent
study was done on patients in Massachusetts hospitals who
were "backed-up", that is, they were in hospital beds for
"administrative necessity."8 Although they no
longer needed hospital care, they could not be discharged
to their homes because they needed nursing home care. The
hospitals could not find nursing homes willing to admit
them, so they were allowed to remain in more costly
hospital beds pending availability of nursing home beds.
The study found that the backup population consisted of
two groups of patients: one group spent a short time in
the queue before being admitted to nursing homes; the
second group spent a long time in the queue. The second
group of patients was sicker and often had severe mental
problems. The findings of this study support the judgment
that, other things being equal, nursing homes will select
the easier-to-care-for patients from the queue.
Another important factor about which there is currently
insufficient information is the influence of hospital
prospective payment systems and other cost-containment
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ISSUES REQUIRING FURTHER STUDY /199
measures on demand for, and availability of, nursing home
beds. A special effort is needed to study these relation-
ships.
Regardless of the payment system, however, the
supplier's market also places heavier demands on the
regulatory system to assure quality because the market
pressure to maintain high quality to attract residents
does not exist. And the business logic that tempts
nursing home administrators to cut operating costs to
minimum levels or even below is hard for many to resist.
The question of what constitutes the best policy with
respect to bed supply has no simple answer. The variation
among states in the number of nursing home beds per
thousand is very large: the national average is about 1
bed per 20 persons aged 65 or over. Minnesota has more
than twice the national average; Florida has about half
the national average. Thus, there is a fourfold vari-
ation. But bed occupancy rates--and excess demand--appear
to exist in most states.6
The uncharted policy areas that are related to bed
supply are (1) alternative ways of financing long-term
care--particularly the possibility of private insurance
arrangements for financing long-term-care services that
are not primarily health-related and are not limited to
payment for services provided in nursing homes; and (2)
the development and greater availability in most
communities of a much larger number of alternative
long-term-care arrangements such as home health care,
homemaker services, congregate housing (including
domiciliary care), meals-on-wheels, special transportation
facilities, adult day-care, and respite care.
If good alternatives to nursing homes were readily
available ant! could be paid for from third-party
insurance, a fraction--the exact number is not now
known--of residents could be cared for more appropriately
in alternative service arrangements or facilities. If
this were to occur, then a certain number of nursing home
beds now occupied by residents requiring lesser levels of
care would become available to help cope with the growing
numbers of older heavy-care residents who must be in
nursing homes. The development of alternative long-term
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care arrangements on a large scale is not likely to occur
until alternative financing arrangements become available.
Exploration of some alternative care arrangements--on a
small scale--is proceeding. The HCFA has sponsored some
innovative long-term-care demonstration projects during
the past 10 years. More recently, under statutory
authority contained in the 1981 budget legislation, states
have been granted waivers to permit them to use Medicaid
funds to finance services in community-based, long-term
projects designed to prevent unnecessary institutional-
ization for individuals who otherwise could receive
Medicaid support only in nursing homes.9 Systematic
evaluation of these programs has just begun.
In sum, the policy issue concerning supply of nursing
home beds is related to the broader policy issue of
developing a more appropriate array of long-term-care
services. This, in turn, hinges on the development of
more appropriate private and public financing arrangements
and policies. A systematic study of these issues is
necessary to design sound public policies to facilitate
development of both the new financing mechanisms and of
the array of long-term-care services needed. This study
should be viewed as a matter of high priority by both the
Congress and the executive branch of the federal
government.
STAFFING OF NURSING HOMES
Once a data base derived from systematic, periodic
resident assessments becomes available, two kinds of
staffing studies will become possible that have not yet
been done satisfactorily. The first will be studies to
develop an algorithm for relating minimum nursing staff
requirements to case mix. Perhaps something analogous to
the "management minutes" concepti° could be devel-
oped. (Management minutes is an empirically derived
algorithm used to estimate the daily nursing time
requirements for a resident based on his/her assessment
scores and service needs.) This is a complex study that
will require considerable sophistication in study design
and execution to produce valid and reliable results. If
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ISSUES REQUIRING FURTHER STUDY /201
completed successfully, it could provide the basis for a
regulatory tool of considerable power.
The second kind of study deals with the issue of staff
qualifications and training. At present, only profes-
sional judgment is used to define the requirements. But
with outcome measures that can be derived from resident
assessment data, studies to compare the effectiveness of
different staffing patterns, types of staff, and training
requirements will be possible. The HCFA should support
well-designed studies within this area. If convincing
evidence becomes available that some approaches to
staffing and training are distinctly superior (in quality
of care/life and cost) to others, the HCFA will be in a
position to incorporate the desirable approaches into its
regulatory standards.
SINGLE- VERSUS MULTIPLE-OCCUPANCY ROOMS
Most nursing homes have been constructed with either all
or most of their rooms designed for double occupancy.
Because beds in most places are in short supply, residents
seldom can choose either private rooms or their
roommates. The nursing home population is heterogeneous,
so this is a thorny issue. It is clear that quality of
life for an undemented resident can be seriously affected
by the functional, mental, and behavioral status and
service needs of a roommate. Moreover, the issues of
privacy and of choice--for example, whether or not to
watch TV or listen to music, and which programs--loom very
high in the quality-of-life values of most residents.
Most mentally alert residents probably would prefer
private rooms if they could! have one. The question is:
Should the HCFA require that all new construction, or
additions to existing nursing homes, be required to have a
specified fraction of private rooms? If so, what should
that fraction be? Not enough is known to answer this
question with confidence. The effects on construction
costs or on operating costs of requiring a specific
proportion of single rooms are not known. Moreover, not
enough is now known either about the preferences of
residents for private rooms and of the desirability of
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having certain residents--particularly some who are
demented--share a room, and whether four-bed rooms might
be better than two-bed rooms.
In the next 10 to 20 years there may be a substantial
amount of new construction or major remodeling of nursing
homes. The committee believes that the HCFA should
commission a study of this issue to determine the proper
balance between single- and multiple-occupancy rooms that
should be required in newly constructed nursing homes and
in additions to--or major remodelings of--existing homes.
Recommendation 7-2: The NCFA should commission a study of
the costs anc! benefits of single-occupancy rooms compared
to multiple-occupancy rooms in nursing hones. The study
should be designed to obtain data about the effects of
single rooms on the quality of life of various types of
nursing home resid ents. The stud y should be completed
within 2 years after it has been authorized. It shorted
contain recon~n~endations for the desired proportions of
single- and n'~cltiple-occupancy rooms in nursing hones. It
should recon~n~end required proportions in future new
construction and ma jor reflood cling of existing build ings.
Representative terms from entire chapter:
nursing homes
