Estimating patient-level nursing home costs

This article presents a methodology developed to estimate patient-level nursing home costs. Such estimates are difficult to obtain because most cost data for nursing homes are available from Medicare or Medicaid cost reports, which provide only average values per patient-day across all patients (or all of a particular payer's patients). The methodology presented in this article yields "resource consumption" (RC) measures of the variable cost of nursing staff care incurred in treating individual nursing home patients. Results from the application of the methodology are presented, using data collected in 1980 on a sample of 961 nursing home patients in 74 Colorado nursing homes. This type of approach could be used to link nursing home payments to the care needs of individual patients, thus improving the overall equity of the payment system and possibly reducing the access barriers facing especially Medicaid patients with high-cost care needs.