Address correspondence to William D. Spector, Ph.D., Senior Social Scientist, Agency for Healthcare Research & Quality, 540 Gaither Rd., Rockville, MD 20850; e-mail: email@example.com. Maria Rhona Limcangco, Ph.D., Analyst, is with the Social & Scientific Systems Inc., Silver Spring, MD. Heather Ladd, M.S., Research Associate, and Dana Mukamel, Ph.D., Professor and Senior Fellow, are with the Academy, Health Policy Research, University of California, Irvine, CA.
Incremental Cost of Postacute Care in Nursing Homes
Version of Record online: 28 OCT 2010
© Health Research and Educational Trust
Health Services Research
Volume 46, Issue 1p1, pages 105–119, February 2011
How to Cite
Spector, W. D., Limcangco, M. R., Ladd, H. and Mukamel, D. (2011), Incremental Cost of Postacute Care in Nursing Homes. Health Services Research, 46: 105–119. doi: 10.1111/j.1475-6773.2010.01189.x
- Issue online: 3 JAN 2011
- Version of Record online: 28 OCT 2010
- Health care costs;
- instrumental variables
Objectives. To determine whether the case mix index (CMI) based on the 53-Resource Utilization Groups (RUGs) captures all the cross-sectional variation in nursing home (NH) costs or whether NHs that have a higher percent of Medicare skilled care days (%SKILLED) have additional costs.
Data and Sample. Nine hundred and eighty-eight NHs in California in 2005. Data are from Medicaid cost reports, the Minimum Data Set, and the Economic Census.
Research Design. We estimate hybrid cost functions, which include in addition to outputs, case mix, ownership, wages, and %SKILLED. Two-stage least-square (2SLS) analysis was used to deal with the potential endogeneity of %SKILLED and CMI.
Results. On average 11 percent of NHs days were due to skilled care. Based on the 2SLS model, %SKILLED is associated with costs even when controlling for CMI. The marginal cost of a one percentage point increase in %SKILLED is estimated at U.S.$70,474 or about 1.2 percent of annual costs for the average cost facility. Subanalyses show that the increase in costs is mainly due to additional expenses for nontherapy ancillaries and rehabilitation.
Conclusion. The 53-RUGs case mix does not account completely for all the variation in actual costs of care for postacute patients in NHs.