Nursing Home Quality as a Public Good

1. Nursing Home Quality as a Public Good David C. Grabowski Harvard Medical School Joseph J. Angelelli Pennsylvania State University Jonathan Gruber Massachusetts Institute of Technology

2. Medicaid and Private-pay prices, 1998

3. Uniform Quality Assumption • Most economists have assumed that quality is uniform within facilities across payer types • Federal law prohibiting discrimination by payer type • Economies of joint production • Professional norms • Lack of individual data • If this is the case, Medicaid can free-ride on private-payers • Studies find association between payer mix and quality.

4. Criticisms of uniform quality assumption • Oversight of federal law very difficult • Economies of joint production not relevant for most direct patient care activities • e.g., assisting residents with bathing, dressing, eating, toileting, and walking

5. Our Contribution • To test whether quality is uniform across Medicaid and private-pay patients within nursing homes. • We use a range of process and outcome based measures of quality • We exploit both within-home and within-person variation in payer type and quality • We exploit Medicaid-private pay rate differentials across states

6. Data • Minimum Data Set (MDS) surveys from KS, ME, MS, ND, OH, SD & WA • MDS collected at least quarterly for all patients, 1998 (4th qtr) thru 2002 • Data combines existing patients with new admissions • Eliminate short-stay Medicare patients • Total sample: 1,626,628 assessments for 359,768 patients from 1,537 facilities. • Facility information from OSCAR system • Rates collected from state Medicaid cost reports

7. Pain Pressure ulcers Physical restraints Incontinence Catheters Bedfast Anti-psychotics Feeding Tubes Urinary tract infection Wound infection Falls Depression Quality Measures

8. Methods (cont.) NH fixed effects model Yint = α + β1MEDICAIDint + β2OTHERint + δXint + γZnt + αt + λn + εint Patient fixed effects models Yint = α + β1MEDICAIDint + β2OTHERint + δXint + γZnt + αt + μi + εint

9. Timing of the Medicaid Effect Yint = α + Σ-k<j<m θj MEDICAIDjint + β1OTHERint + δXint + γZnt + αt + μi + εint • Replace Medicaid dummy with three lead (or greater) and three (or greater) lag transition terms in the patient-level fixed effects model. • Restrict model to only those individuals observed 7+ periods and excludes Medicaid transitions with fewer than 3 assessments pre- and post-transition

11. Transition Results: Total Sample

12. Transition Results: New Admits Only

13. Alternate Specification • Another potentially exogenous source of variation is the difference between the private-pay price and Medicaid • Larger rate differential should entail worse Medicaid quality • Thus, we examine a model that interacts the ratio of rates (Medicaid/private-pay) with payer source • Results do not support differential quality

14. Conclusions • The results support the uniform quality assumption used in most economic studies of the NH sector • Little evidence of a Medicaid causal effect • There is the potential for “free ridership” on the part of state Medicaid programs • Segregation by payer type • “Driven to tiers”