Nursing home cost studies and reimbursement issues

Area of Science:

• Health Services Research
• Econometrics
• Long-Term Care Policy

Background:

• Understanding nursing home cost drivers is crucial for equitable reimbursement.
• Existing research links provider and service characteristics to average care costs.
• Gaps remain in delineating the impact of patient mix, service intensity, and quality on costs.

Purpose of the Study:

• To review existing research on nursing home cost functions.
• To identify systematically associated provider and service characteristics with care costs.
• To assess the current limitations of econometric models in predicting efficient nursing home care costs.

Main Methods:

• Systematic review of nursing home cost function research.
• Analysis of associations between provider/service characteristics and average cost of care.
• Evaluation of econometric cost function capabilities for rate-setting.

Main Results:

• Certain provider and service characteristics are consistently linked to variations in average nursing home costs.
• These findings can inform provider grouping and rate adjustments for reimbursement.
• The precise relationship between cost and patient mix, service intensity, and quality of care is not fully understood.

Conclusions:

• Econometric cost functions currently cannot predict the efficient cost of nursing home care tailored to patient needs.
• Reimbursement system design must integrate technical cost information with public policy objectives for long-term care.
• Further research is needed to fully delineate cost drivers related to patient complexity and care quality.