Medicaid and Private-pay prices, 1998
Nursing Home Quality as a Public Good
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140
120
David C. Grabowski
Harvard Medical School
Joseph J. Angelelli
Pennsylvania State University
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$ 80
60
40
20
Jonathan Gruber
Massachusetts Institute of Technology
Uniform Quality Assumption
• Most economists have assumed that quality is
uniform within facilities across payer types
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Federal law prohibiting discrimination by payer type
Economies of joint production
Professional norms
Lack of individual data
• If this is the case, Medicaid can free-ride on
private-payers
0
KS
ME
MS
ND
OH
SD
WA
Criticisms of uniform quality
assumption
• Oversight of federal law very difficult
• Economies of joint production not relevant
for most direct patient care activities
– e.g., assisting residents with bathing, dressing,
eating, toileting, and walking
– Studies find association between payer mix and quality.
Our Contribution
• To test whether quality is uniform across
Medicaid and private-pay patients within
nursing homes.
– We use a range of process and outcome based
measures of quality
– We exploit both within-home and withinperson variation in payer type and quality
– We exploit Medicaid-private pay rate
differentials across states
Data
• Minimum Data Set (MDS) surveys from KS, ME,
MS, ND, OH, SD & WA
– MDS collected at least quarterly for all patients, 1998
(4th qtr) thru 2002
– Data combines existing patients with new admissions
– Eliminate short-stay Medicare patients
– Total sample: 1,626,628 assessments for 359,768
patients from 1,537 facilities.
• Facility information from OSCAR system
• Rates collected from state Medicaid cost reports
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Quality Measures
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Pain
Pressure ulcers
Physical restraints
Incontinence
Catheters
Bedfast
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Anti-psychotics
Feeding Tubes
Urinary tract infection
Wound infection
Falls
Depression
Timing of the Medicaid Effect
Yint = α + Σ-k<j<m θj MEDICAIDjint + β1OTHERint +
δXint + γZnt + αt + µi + εint
• Replace Medicaid dummy with three lead (or
greater) and three (or greater) lag transition terms
in the patient-level fixed effects model.
• Restrict model to only those individuals observed
7+ periods and excludes Medicaid transitions with
fewer than 3 assessments pre- and post-transition
Transition Results: Total Sample
Period
T-3+
T-2
T-1
Transition
T+1
T+2
T+3+
Methods (cont.)
Incontinence
-0.006 (0.99)
-0.00004 (0.01)
0.003 (0.51)
0.004 (0.54)
0.001 (1.65)
0.014 (2.15)
0.014 (2.23)
Depression
-0.008 (1.48)
0.0003 (0.05)
0.004 (0.74)
0.009 (1.56)
0.015 (2.50)
0.017 (2.84)
0.014 (2.52)
NH fixed effects model
Yint = α + β1MEDICAIDint + β2OTHERint +
δXint + γZnt + αt + λn + εint
Patient fixed effects models
Yint = α + β1MEDICAIDint + β2OTHERint +
δXint + γZnt + αt + µi + εint
Outcome
Facility FEs
Patient FEs
Dep Var Mean
Pain
0.008 (11.76)
-0.009 (7.64)
0.13
Pressure ulcers
-0.007 (12.38)
-0.011 (11.10)
0.08
Restraints
-0.002 (4.75)
0.006 (7.21)
0.09
Incontinence
0.018 (24.25)
0.013 (11.86)
0.54
Catheters
-0.010 (20.24)
-0.014 (23.11)
0.08
Bedfast
-0.002 (4.24)
-0.007 (11.60)
0.06
Anti-psychotics
0.009 (8.67)
0.005 (3.68)
0.19
Feeding tubes
-0.002 (3.99)
-0.008 (19.83)
0.07
Urinary infection
-0.004 (6.62)
-0.013 (11.49)
0.09
Wound infection
-0.003 (13.58)
-0.004 (9.92)
0.02
Falls
-0.022 (31.82)
-0.019 (14.07)
0.16
Depression
0.034 (36.79)
0.023 (23.25)
0.43
Transition Results: New Admits Only
Period
T-3+
T-2
T-1
Transition
T+1
T+2
T+3+
Incontinence
0.006 (0.63)
0.010 (1.05)
0.008 (0.84)
0.007 (0.76)
0.015 (1.58)
0.017 (1.75)
0.017 (1.84)
Depression
-0.006 (0.75)
0.011 (1.25)
0.013 (1.49)
0.019 (2.27)
0.025 (2.94)
0.025 (2.98)
0.021 (2.52)
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Alternate Specification
• Another potentially exogenous source of variation
is the difference between the private-pay price and
Medicaid
• Larger rate differential should entail worse
Medicaid quality
• Thus, we examine a model that interacts the ratio
of rates (Medicaid/private-pay) with payer source
• Results do not support differential quality
Conclusions
• The results support the uniform quality
assumption used in most economic studies
of the NH sector
– Little evidence of a Medicaid causal effect
• There is the potential for “free ridership” on
the part of state Medicaid programs
• Segregation by payer type
– “Driven to tiers”
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