Types of Regulatory Tools
• Provision goods/services
• Contracting
• Loans, loan guarantees, grants
• Command & control standards (social
regulation)
• Economic incentives
• Information disclosure
• Economic regulation
• Subsidies/Vouchers
5 Criteria For Evaluating
Regulatory Tools
• Effectiveness
• Efficiency
• Manageability
• Equity
1) Fairness
2) Redistribution
• Political Legitimacy and Feasibility
1)
2)
Feasibility
Accountability
Nursing Home Regulatory Oversight
•
•
Regulations address quality concerns: e.g., staffing, infection control,
physical environment, dietary requirements
Detecting Non-Compliance: Survey and Certification
– Primarily administered by state agencies
• Inspect at least every 15 months
• Inspect in response to complaints
– CMS occasionally surveys facilities
•
Sanctions
– Terminate Medicare/Medicaid provider agreement
– Financial sanctions:
• CMPs (e.g., fines)
• Denial of payment
– No new patients until deficiency cured
– Corrective action plan
• Work w/ state and CMS to develop plan to cure deficiencies
• Sanctions if no cure by specified date
– In-service training
– Appointment temporary or permanent new management
Donabedian -- Aspects of Quality
• Structural Characteristics:
–
–
–
–
Characteristics of provider
Tools and resources
Physical setting
Organizational setting
• Process:
– Interaction between practitioner and patient
• Technical
• Interpersonal
– Interaction between personnel
• Outcome
– Measure of patient’s current health status/change in
health status/patient satisfaction
Nursing Home Regs
42 C.F.R. § 483.60 (Pharmacy Services)
(a) A facility must provide pharmaceutical
services (including procedures that assure the
accurate acquiring, receiving, dispensing, and
administering of all drugs and biologicals) to
meet the needs of each resident.
(b) The facility must employ or obtain the
services of a licensed pharmacist . . . .
Nursing Home Regs
42 C.F.R. § 438.20 (Resident Assessment)
The facility must conduct initially and periodically a
comprehensive, accurate, standardized, reproducible
assessment of each resident's functional capacity. . . .
(b) Comprehensive assessments.
(1) A facility must make a comprehensive
assessment of a resident's needs, using the resident
assessment instrument (RAI) specified by the State.
Nursing Home Regs
42 C.F.R. § 483.25 (Quality of care)
Each resident must receive and the facility must provide the necessary care and
services to attain or maintain the highest practicable physical, mental, and
psychosocial well-being, in accordance with the comprehensive assessment and plan
of care.
(a) Activities of daily living. Based on the comprehensive assessment of a resident, the
facility must ensure that-(1) A resident's abilities in activities of daily living do not diminish unless
circumstances of the individual's clinical condition demonstrate that diminution
was unavoidable. This includes the resident's ability to-(i) Bathe, dress, and groom;
(ii) Transfer and ambulate;
(iii) Toilet;
(iv) Eat; and
(v) Use speech, language, or other functional communication systems.
(c) Notification of facility policy. At admission, the facility must—
(1) Inform both the incoming resident and, in the case of a minor,
the resident’s parent(s) or legal guardian(s) of the facility’s
policy regarding the use of restraint or seclusion…;
(2) Communicate its restraint and seclusion policy in a language
that the resident, or his or her parent(s) or legal guardian(s)
understands…;
(3) Obtain an acknowledgment, in writing, from the resident, or in
the case of a minor, from the parent(s) or legal guardian(s)
that he or she has been informed of the facility’s policy on the
use of restraint or seclusion…. Staff must file this
acknowledgment in the resident’s record….
42 C.F.R. §483.386
Command and Control Standards
Effectiveness
• Strong nexus between standard and goal?
• Thoroughness
• Requires strong enforcement
– Detecting non-compliance
– Meaningful and workable sanctions
Efficiency
• Benefits (depends on effectiveness)
• Government costs = standard-setting process + enforcement
– Greater complexity means higher administrative costs
•
•
Burden to regulated individuals/entities
Unintended consequences
Command and Control Standards (con’t)
Manageability
• Impacted by complexity issue
• Frequent updating of standards?
Equity
• Same standards for everyone
Command and Control Standards (con’t)
Political Feasibility
• Predictions under public choice theory
• Other factors
– Public attention
– Support/opposition powerful government official
– Infringes liberty/free market
Political Legitimacy – strong
Indirect Regulatory Tools
Effectiveness
• Build on others’ expertise/experience
• Flexibility across localities/populations
• Principal-agent concerns
Manageability
• Oversight challenges
Efficiency
• Avoid start-up costs/duplication
• Monitoring costs
Indirect Regulatory Tools (con’t)
Political Feasibility
• Giving others “a piece of the action”
• [But sometimes state/3P does not want
responsibility]
Political Accountability
• Blurs accountability
Financial Incentives
Effectiveness
•
•
•
Strong nexus between standard and goal?
Thoroughness
Compared to Command and Control
–
–
–
–
•
Regulated entities may ignore standards
Incentives maximize quality
Penalizing undercapitalized providers
Less sharing information across providers (if incentives based on relative performance)
Enforcement considerations
– How easily can regulated entities manipulate the data?
– How hard to detect cheating?
– Meaningful and workable sanctions
Efficiency
•
•
Benefits (depends on effectiveness)
Government costs = standard-setting process + enforcement +bonus payments
•
•
Burden to regulated individuals/entities
Unintended consequences
– Wasteful if entities already meeting standards
– E.g., creaming
Financial Incentives (con’t)
Manageability
• Standard setting
–
–
–
–
–
•
Setting priorities
Select measures
Set financial incentives
Update
Assist certain providers
Enforcement/data validation
Equity
• Regulated entities
– Same standards
– Adequately adjust for uneven playing field?
•
Patients
– Some providers ignore standards
– Creaming
– Impact penalties undercapitalized providers
Financial Incentives (con’t)
Political Feasibility
• Regulated industry – less opposition
– Less coercive
– Some “winners”
•
Beneficiaries
– Less supportive: Industry compliance voluntary
– More supportive: encourages maximizing quality
Political Accountability
• Weaker than command & control regulation
Consumer Information
Effectiveness
• Salience
• Information understandable
• Consumers use information
• Consumers have real choice among
sellers