Nursing Home Case‐Mix Reimbursement in Mississippi and South Dakota

Objective. To evaluate the effects of nursing home case‐mix reimbursement on facility case mix and costs in Mississippi and South Dakota. Data Sources. Secondary data from resident assessments and Medicaid cost reports from 154 Mississippi and 107 South Dakota nursing facilities in 1992 and 1994, before and after implementation of new case‐mix reimbursement systems. Study Design. The study relied on a two‐wave panel design to examine case mix (resident acuity) and direct care costs in 1‐year periods before and after implementation of a nursing home case‐mix reimbursement system. Cross‐lagged regression models were used to assess change in case mix and costs between periods while taking into account facility characteristics. Data Collection. Facility‐level measures were constructed from Medicaid cost reports and Minimum Data Set‐Plus assessment records supplied by each state. Resident case mix was based on the RUG‐III classification system. Principal Findings. Facility case‐mix scores and direct care costs increased significantly between periods in both states. Changes in facility costs and case mix were significantly related in a positive direction. Medicare utilization and the rate of hospitalizations from the nursing facility also increased significantly between periods, particularly in Mississippi. Conclusions. The case‐mix reimbursement systems appeared to achieve their intended goals: improved access for heavy‐care residents and increased direct care expenditures in facilities with higher acuity residents. However, increases in Medicare utilization may have influenced facility case mix or costs, and some facilities may have been unprepared to care for higher acuity residents, as indicated by increased rates of hospitalization.