Effect of the Medicare Catastrophic Coverage Act on payer source changes among nursing home residents

The Medicare Catastrophic Coverage Act (MCCA) of 1989 was designed to expand Medicare's post-acute care benefits, reduce copayments, and raise the asset limit for Medicaid eligibility. This analysis uses a semi-Markov transition model to estimate the effect of the MCCA on changes to Medicare coverage and the spend-down rate among 5,551 new nursing home admissions followed for an average of 2.5 years. We found that Medicare use increased in 1989 and the risk of transiting from Medicare to self-pay decreased compared to 1988. Spend-down from self-pay to Medicaid was 60% more likely in 1990. The MCCA clearly increased access to Medicare coverage of nursing home care among individuals previously paying privately.