What would VA nursing home care cost? Methods for estimating private sector payments

To describe the methods used to validate Veterans Health Administration (VA) nursing home acuity data and estimate hypothetical payments for nursing home patients in VA-based and community-based units.

For a sample of VA-based and community-based nursing home patients at six sites, auditors validated the resource utilization classifications from the most recent complete full or quarterly assessments. Scores were averaged to obtain an acuity index for each nursing home population. Per diem rates were calculated for a fully phased-in Medicare prospective payment system, a transitional prospective payment system for free-standing and hospital-based nursing homes, and average national Medicaid benefits based on VA patients in community nursing facilities. Days of care came from each site's end of year gains and losses financial statement. Nursing home estimates were calculated by multiplying together the number of days of care, the per diem, and the acuity index.

The VA acuity information was valid. Generally, veterans' dependencies and depression were underscored (similar to the practice for non-VA patients). The cost of patients' nursing home care absent VA facilities would depend on the types of nursing homes in which they were placed. The most costly option (hospital-based facilities with cost exemptions) would cost 3.5 times the least costly. Only the Medicaid-only estimate was lower than actual VA expenditures.

Future research on nursing homes must relate quality to the cost of care to help policy makers assess the value of different options for providing that care.