Impact of the Medicare Catastrophic Coverage Act on nursing homes

The Medicare Catastrophic Coverage Act (MCCA) of 1988 altered eligibility and coverage for skilled nursing facility (SNF) care and changed Medicaid eligibility rules for nursing-home residents. Detailed data on the residents of a for-profit nursing-home chain and Medicare claims for a 1 percent sample of beneficiaries were used to examine the impact of the MCCA on nursing homes. The case mix of nursing-home admissions was scrutinized, specifically for length of stay, discharge disposition, rate of hospitalization, and changes in payer source. Findings revealed that, although the proportion of Medicare-financed nursing-home care increased, as did the case-mix severity of residents during the MCCA period, there was no corollary reduction in hospital use by nursing-home residents.