Evaluation of a prospective payment system for VA contract nursing homes

An evaluation of a pilot program for community nursing home care reimbursement by Department of Veterans Affairs Medical Centers (VAMCs) was undertaken. Eight VAMCs began using the Enhanced Prospective Payment System (EPPS) in 1992. These sites were compared to eight customary payment sites in a pretest/posttest quasi-experimental design. Outcomes included access to care, administrative workload, quality of care, and cost. As expected, per diem costs were significantly higher for EPPS than customary reimbursement patients ($106 vs. $87). However, EPPS sites placed veterans more quickly (81 days vs. 113 days; p < .01) than comparison sites and reduced administrative workload associated with placement. EPPS sites also increased the number of Medicare-certified homes under contract (76% vs. 54%) and placed significantly more veterans who received therapy (20% vs. < 1%). Savings in hospital days more than offset the increased cost of nursing home placement. Because the findings were attributed largely to a few veterans with long lengths of hospital stay, the early success of EPPS may diminish as the backlog of these long-stay patients decreases.