Misconceptions about case-mix payments for nursing homes

Despite the increasing use of case-mix payment systems for skilled and intermediate nursing home care (at least 10 state Medicaid programs have adopted or are considering adopting such a system), misconceptions about such systems still exist. Unless these inaccurate perceptions are corrected, a state may adopt a system that fails to realize its goals. Some of these misconceptions include the beliefs that case-mix payment systems: Apply to all nursing homes costs; Will benefit hospital-based facilities; Will resolve the access problems of heavy care public patients; Will result in higher statewide payment rates because patient characteristics are factored directly into the calculations. In fact, case-mix adjustments are applied only to costs that can be traced directly to patients' impairments. Nursing services and some ancillary services are dependent on case mix, while administrative and support services are largely independent of case mix. Capital costs usually can be ignored in formulating the case-mix adjustment. Although hospital-based facilities frequently have sicker patients than freestanding facilities, studies show that only a portion of the cost differential is explained by case-mix differences. In the case of heavy-care patients, some believe that case-mix payment systems will resolve access problems by paying higher rates in response to the higher treatment costs. Access may not improve, however, if the new rates are lower than those paid by comparable private patients. Perhaps a loosening in the certificate-of-need process will also be needed to resolve the access problem.(ABSTRACT TRUNCATED AT 250 WORDS)