Incentives in case-mix measures for long-term care

Area of Science:

• Health Services Research
• Healthcare Economics
• Geriatric Care

Background:

• Several states utilize patient-based payment models for skilled nursing facilities (SNFs) and intermediate care facilities.
• The Health Care Financing Administration (HCFA) is developing a prospective case-mix system for Medicare SNF payments.
• Current trends suggest payment systems may prioritize services delivered over patient clinical needs.

Purpose of the Study:

• To evaluate the potential impact of proposed Medicare payment systems for SNFs.
• To identify inherent risks and incentives within current and developing case-mix reimbursement models.
• To propose an alternative payment framework prioritizing patient characteristics.

Main Methods:

• Analysis of existing state-level patient-based payment systems.
• Review of the Health Care Financing Administration's mandate for Medicare SNF payments.
• Conceptual framework development for a dependence-based payment system.

Main Results:

• Existing and proposed payment systems may inadvertently incentivize cost-increasing behaviors.
• Reliance on service delivery data, rather than clinical needs, poses potential risks to patient care.
• A system based on patient dependence offers a more clinically relevant and potentially safer reimbursement model.

Conclusions:

• Current trends in SNF payment reform risk creating detrimental incentives.
• Reimbursement models should be redesigned to focus on patient dependence levels.
• A dependence-based approach is preferable for ensuring quality and cost-effectiveness in SNF care.