New York s Nursing Homes: Shifting Roles and New Challenges

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1 MEDICAID INSTITUTE AT UNITED HOSPITAL FUND New York s Nursing Homes: Shifting Roles and New Challenges

2 About the Medicaid Institute at United Hospital Fund Established in 2005, the Medicaid Institute at United Hospital Fund provides information and analysis explaining the Medicaid program of New York State. The Medicaid Institute also develops and tests innovative ideas for improving Medicaid s program administration and service delivery. While contributing to the national discussion, the Medicaid Institute aims primarily to help New York s legislators, policymakers, health care providers, researchers, and other stakeholders make informed decisions to redesign, restructure, and rebuild the program. About United Hospital Fund The United Hospital Fund is a health services research and philanthropic organization whose primary mission is to shape positive change in health care for the people of New York. We advance policies and support programs that promote high-quality, patient-centered health care services that are accessible to all. We undertake research and policy analysis to improve the financing and delivery of care in hospitals, health centers, nursing homes, and other care settings. We raise funds and give grants to examine emerging issues and stimulate innovative programs. And we work collaboratively with civic, professional, and volunteer leaders to identify and realize opportunities for change. Medicaid Institute at United Hospital Fund James R. Tallon, Jr. President David A. Gould Senior Vice President for Program Michael Birnbaum Vice President Copyright 2013 by the United Hospital Fund ISBN Funded by the New York State Department of Health This report is available online at the United Hospital Fund's website,

3 MEDICAID INSTITUTE AT UNITED HOSPITAL FUND New York s Nursing Homes: Shifting Roles and New Challenges Thomas H. Dennison M A X W E L L S C H O O L O F C I T I Z E N S H I P A N D P U B L I C A F F A I R S S Y R A C U S E U N I V E R S I T Y A U G U S T

4 Contents FOREWORD iv INTRODUCTION 1 THE SCOPE OF NURSING HOME CARE IN NEW YORK 3 Trends in Capacity and Occupancy 3 Changing Roles 5 Implications 10 CHARACTERISTICS AND SERVICE USE OF NURSING HOME PATIENTS AND RESIDENTS 11 Population Profiles 11 Use of Health Services 19 Implications 21 FINANCIAL CHARACTERISTICS 22 Shifting Payment Sources Reflect Changing User Mix 22...but Medicaid Remains the Dominant Payer 22 Operating Costs and Financial Performance 26 Implications 28 CONSIDERATIONS FOR PUBLIC POLICY AND SECTOR LEADERSHIP 29

5 Foreword The United Hospital Fund s analytic work aims to explain important health care issues, improve our shared understanding of what they mean for New Yorkers, and connect public officials and private-sector leadership with the independent information and thoughtful analysis that they need to shape positive change. New York s Nursing Homes: Shifting Roles and New Challenges prepared for the Medicaid Institute at United Hospital Fund by Thomas H. Dennison of Syracuse University s Maxwell School of Citizenship and Public Affairs focuses on a critical component of our health and long-term care delivery systems at a time of special challenge. Serving many of the oldest, poorest, and most disabled New Yorkers, nursing homes are grappling today with delivery system change and payment reforms under the Affordable Care Act, long-term care policy reform shaped by New York State s Medicaid Redesign Team, and changing demographics and market dynamics. Answers to fundamental questions How will care be delivered in nursing homes? How will nursing homes partner with other health and long-term care providers? How will nursing homes be paid? are being reshaped by complex, intersecting, and fast-moving forces. The data analysis contained in this report offers detailed information on the characteristics of New Yorkers relying on nursing home care in recent years, as well as the shifting experiences of nursing homes themselves. The report s consideration of recent and upcoming changes for the nursing home sector provides thoughtful insights for policy and industry leaders. As always, we welcome your comments on our work. James R. Tallon, Jr. President United Hospital Fund i v M E D I C A I D I N S T I T U T E A T U N I T E D H O S P I T A L F U N D

6 Introduction Nursing homes also known as nursing facilities 1 play a critical role in New York s longterm care and health care delivery systems. How that role has evolved and, in fact, expanded since the mid-1990s, and the implications of these ongoing changes, are the subjects of this report, which builds on an earlier Fund issue brief, Changes in Nursing Home Care, : New York State. 2 The period covered by this report, 1996 to 2010, spans two phases in the lives of New York s nursing homes. At the beginning of the study period, many nursing homes were in the first phase, functioning primarily as residential communities for seniors. By 2010, most facilities had transitioned to Phase Two, increasingly providing short-term care for people continuing recuperation after a hospital stay. In effect, most nursing homes are now each essentially two facilities operating under a single roof, providing both post-acute services and long-term care. Going forward, nursing homes will continue to evolve as they face an ascendant third phase that relies on integrated care delivery and presents a new fiscal reality. Reimbursement for both post-acute services and long-term care will no longer be grounded in unit-based payments for services delivered in relative isolation from other components of the health care and long-term care delivery systems. On the post-acute side, nursing homes face closer care management and financial relationships with hospitals, through Medicare Accountable Care Organizations and bundled payments. On the long-term care side, a shift to managed care for residents who are covered by Medicaid means nursing homes must adapt to contracting with and being paid by plans, rather than the State. Increased interdependence among diverse organizations across care settings means that each sector must be viable to allow a new system with the ability to improve care and lower costs to emerge. Three primary sources of data were used to develop this profile of nursing homes and the New Yorkers relying on them. First, cost reports for 1996 through 2010, filed by each nursing home with the New York State Department of Health, provided the foundation for the report s description of the nursing home sector. Second, data from The New York State Minimum Data Set (MDS) for years 2000 through 2010 were used to profile the users of nursing 1 This report uses the terms nursing homes and nursing facilities interchangeably. It does not use the term skilled nursing facilities, which is sometimes used to mean all nursing homes but at other times refers to a subset of nursing facilities that provides rehabilitation and other skilled services. 2 Dennison TH Changes in Nursing Home Care, : New York State. New York: United Hospital Fund. Available online at N E W Y O R K S N U R S I N G H O M E S : S H I F T I N G R O L E S A N D N E W C H A L L E N G E S 1

7 homes. 3 Third, a series of interviews with nursing home sector leadership and policymakers provided context for, and perspectives on, the cost report and MDS data. Those interviews found a broad consensus among participants including individuals directly involved in the delivery of nursing home care, senior nursing facility administrators, and representatives of nursing home associations and other advocacy organizations that the patterns and trends reported here matched their own experiences and perspectives. The report begins by examining patterns and trends in utilization including admissions, discharges, and length of stay for both short-term patients, defined as having stays of 90 days or less, and long-term residents, those with stays of over 90 days. It then examines selected characteristics of these two populations, including levels of disability, diagnoses, and use of health services during their nursing home stays. Next, the report explores the financial characteristics of the nursing home sector, including sources of payment, trends in overall expenses, and operating performance. Throughout, variations by sponsorship, and between New York City and the rest of the state, are examined when data are available and reported when the conclusions are relevant. Finally, the report s last section provides context and considerations for public policy and the sector s leadership. 3 Automated transmission of MDS data did not begin until The quality and completeness of the data set were insufficient for analytic purposes until Data for 2010 included only the first nine months of the calendar year; they were adjusted for this report to reflect a full year. 2 M E D I C A I D I N S T I T U T E A T U N I T E D H O S P I T A L F U N D

8 The Scope of Nursing Home Care in New York This section of the report describes overall patterns in nursing home care observed in New York facilities. Trends in Capacity and Occupancy Continuing the evolution observed since 1996, New York s nursing homes have changed even more significantly since 2005, the last year for which data were available when Changes in Nursing Home Care, was published. In recent years, the sector has experienced many of the same forces and trends as nursing homes nationwide. Fewer Beds, Fewer Facilities The number of nursing home beds in New York declined very slightly between 1996 and 2010, from about 114,000 to 112,000, according to cost reports submitted to the State. 4 This 1.7 percent decrease over the 14-year study period translates into a reduction in overall capacity of about 0.1 percent per year. Notably, that decline is attributable to only the nonprofit and public sector, with a combined loss of 5,000 beds (from approximately 62,000 to 57,000); the number of beds in for-profit facilities increased by over 3,000, from approximately 52,000 to 55,000. The total number of New York nursing facilities submitting cost reports declined by 43, from 655 to 612, or 7 percent, between 1996 and 2010 (Table 1). Due primarily to closures and conversions spurred by financial pressures, the not-for-profit sector lost 37 facilities, or 86 percent of the total reduction. There was little change in the numbers of for-profit and public nursing homes. Table 1. Number of Nursing Facilities by Year and Sponsorship, New York State For-Profit Not-for-Profit Public Total Source: RCF4 nursing facility cost reports filed with the New York State Department of Health, , obtained through HANYS/FACETS. 4 Of the 631 nursing facilities licensed by New York State in 2010, 612 submitted cost reports that year; the number of facilities and beds is therefore slightly undercounted. This report assumes that non-reporting facilities have characteristics that are fully consistent with those of reporting facilities. N E W Y O R K S N U R S I N G H O M E S : S H I F T I N G R O L E S A N D N E W C H A L L E N G E S 3

9 New York s decline in the total number of nursing homes is generally consistent with the national trend over a similar period a 9 percent decrease between 2000 and The current sponsorship mix in New York, however, is considerably different from the national picture. Two-thirds (67 percent) of nursing homes nationwide were for-profit in 2009, compared to half (49 percent) in New York State. 6 Declining Occupancy Rate, Increasing Admissions The number of people in nursing homes in New York State also declined over the 14-year study period. At the end of 2010, the census was about 104,000 people, compared to 110,000 in 1996 a decrease of 6 percent, all of which occurred between 2005 and That drop contrasted sharply with a national increase, between 2005 and 2009, of 3 percent. 7 Because New York s nursing home census decreased by more than the number of beds, the overall occupancy rate the share of all nursing home beds occupied at a point in time declined from 97 percent at the end of 1996 to 94 percent at the close of 2010 (Figure 1). It remained markedly higher, however, than the national average occupancy rate, which was 84 percent in Figure 1. Nursing Home Occupancy Rates, New York State 100% 95% 97% 95% 93% 94% 90% 85% 80% Source: RCF4 nursing facility cost reports filed with the New York State Department of Health, , obtained through HANYS/FACETS. 5 Centers for Medicare & Medicaid Services Nursing Home Data Compendium 2010 Edition. Washington, DC: Centers for Medicare & Medicaid Services. [Cited hereafter as CMS 2010.] Available online at Provider-Enrollment-and-Certification/CertificationandComplianc/downloads/nursinghomedatacompendium_508.pdf 6 CMS CMS CMS M E D I C A I D I N S T I T U T E A T U N I T E D H O S P I T A L F U N D

10 The occupancy rate over time conveys changes in the relationship between system capacity and overall demand for nursing home services, but it cannot reveal important shifts in the nature of the demand for care within nursing homes. While the occupancy rate decreased between 1996 and 2010, the number of admissions each year per bed more than doubled, from 0.8 to 2.1 (Figure 2). Over time, on average, each nursing home bed was being used by more people each year. Figure 2. Nursing Home Beds and Admissions, New York State 250, , , ,000 Admissions Beds 50, Source: RCF4 nursing facility cost reports filed with the New York State Department of Health, , obtained through HANYS/FACETS. In 1996, there were 89,000 nursing home admissions in New York. This figure increased by 66 percent in just the four years between 1996 and 2000, by a further 42 percent between 2000 and 2005, and by another 14 percent between 2005 and 2010, for a total of 239,000 admissions in 2010 an overall increase of 168 percent since Changing Roles Since the early 2000s, New York s nursing facilities have played an increasingly large role for people recuperating after hospital stays. The Rise of Short-Stay Care As noted above, nursing homes are increasingly serving two distinct populations. One group short-term patients, often admitted for post-acute care consists of those whose last Medicare assessment for the calendar year reflected an actual or projected stay of 90 days or less. The other group long-stay residents consists of those whose last assessment of the calendar year did not indicate a Medicare short stay (Medicare 5-, 14-, 30-, 60-day assessments) or an admission with a projected discharge date within 90 days. N E W Y O R K S N U R S I N G H O M E S : S H I F T I N G R O L E S A N D N E W C H A L L E N G E S 5

11 The distribution of short-term patients and long-term residents shifted substantially between 2000 and 2010 (Figure 3). While the resident census declined very slightly, from about 141,000 to 136,000, or 3 percent, the number of short-stay patients increased from 70,000 to 125, percent. Overall, the ratio of short-stay patients to long-stay residents doubled over the decade, from about 1:2 in 2000 to almost 1:1 in Figure 3. Short-Stay Patients and Long-Stay Residents, New York State 160, , , ,000 80,000 60,000 Long-Stay Short-Stay 40,000 20, Source: Minimum Data Set (MDS) data for all New York State nursing homes ; analysis provided by Leading Age New York [formerly New York Association of Homes and Services for the Aging]/EQUIP for Quality under Centers for Medicare & Medicaid Services DUA #08591 and New York State DUA # The dramatic increase in short-stay patients means far quicker and far more nursing home discharges. The number of discharges following stays of 90 days or less almost doubled from 92,000 in 2000 to 180,000 in This change was driven largely by discharges following stays of 30 days or less, which increased from 62,000 to 130,000 a powerful trend that dates back to By contrast, discharges following stays longer than 90 days were essentially flat, declining by 4 percent over the decade. 9 Dennison TH Changes in Nursing Home Care, : New York State, p.7. New York: United Hospital Fund. Available online at 6 M E D I C A I D I N S T I T U T E A T U N I T E D H O S P I T A L F U N D

12 While short nursing home stays increased throughout New York State, they grew faster outside New York City (Figure 4). By 2010 the number of unique short-stay patients in the rest of the state (87,000) surpassed the number of long-stay residents (83,000). In New York City, however, long-stay residents (53,000) still outnumbered short-stay patients (38,000) in Figure 4. Short-Stay Patients and Long-Stay Residents, by Region New York City Rest of State 100, ,000 80,000 80,000 60,000 40,000 60,000 40,000 Long-Stay Short-Stay 20,000 20, Source: Minimum Data Set (MDS) data for all New York State nursing homes ; analysis provided by Leading Age New York/EQUIP for Quality under CMS DUA #08591 and NYS DUA # Throughout the decade, the majority of nursing home users 70 percent of short-stay patients and 61 percent of long-stay residents were in facilities outside New York City. This pattern holds even among those covered by Medicaid: in 2010, 56 percent of Medicaid beneficiaries using nursing homes were enrolled elsewhere. 10 This is a notable anomaly in New York s Medicaid program, where the majority of elderly beneficiaries (64 percent), 11 as well as the majority of enrollees who use home health services (63 percent) and personal care (67 percent), are from New York City United Hospital Fund analysis of New York State Department of Health [DOH] recipient counts for Medicaid long-term care in calendar year United Hospital Fund analysis of DOH enrollment reports for December United Hospital Fund analysis of DOH recipient counts for Medicaid long-term care in calendar year N E W Y O R K S N U R S I N G H O M E S : S H I F T I N G R O L E S A N D N E W C H A L L E N G E S 7

13 More Transfers from and to Hospitals Hospitals have always been the major source of nursing home admissions; they accounted for 83 percent in 1996, and 90 percent in But over that period, the volume of nursing home admissions from hospitals rose from about 74,000 to 216,000 an increase of 193 percent while admissions from home were flat (Figure 5). This increase is directly related to these facilities growing role serving people recuperating after a hospital stay. Figure 5. Nursing Home Admissions by Source, New York State 250, , , ,000 Hospital Home Other 50, Source: RCF4 nursing facility cost reports filed with the New York State Department of Health, , obtained through HANYS/FACETS. In keeping with the increase in short-stay patients using nursing homes for post-acute care and rehabilitation, there was a five-fold increase in the number of people discharged from nursing homes to their own homes, from about 19,000 in 1996 to 104,000 in This is a different trajectory of care than was typical at the beginning of the study period, when admission to nursing homes was more often a permanent placement toward the end of life. Nursing homes also continue to discharge a large share of those using their services to hospitals, however. The number of users discharged to hospitals increased by 154 percent, from about 34,000 in 1996 to 85,000 in 2010, although this rate of increase slowed over the period (Figure 6). 8 M E D I C A I D I N S T I T U T E A T U N I T E D H O S P I T A L F U N D

14 Unlike the source of nursing home admissions, which shows little geographic variation, the destination of discharge varies dramatically between New York City and the rest of New York State, with nursing homes in New York City discharging more users to hospitals (Figure 7). In 2010, for every 100 people discharged to home, another 66 were transferred to hospitals in the rest of the state, while 114 people were discharged to hospitals in New York City. Figure 6. Nursing Home Discharges by Destination, New York State 120, ,000 80,000 60,000 40,000 To Home To Hospital To Other Residential Care Facility Death 20, Source: RCF4 nursing facility cost reports filed with the New York State Department of Health, , obtained through HANYS/FACETS. Figure 7. Nursing Home Discharges by Destination and Region New York City Rest of State 70,000 60,000 50,000 40,000 30,000 20,000 10,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 To Hospital To Home Source: RCF4 nursing facility cost reports filed with the New York State Department of Health, , obtained through HANYS/FACETS. N E W Y O R K S N U R S I N G H O M E S : S H I F T I N G R O L E S A N D N E W C H A L L E N G E S 9

15 Clearly, nursing homes now play an integral role in the continuum of care, as more nursing home users are admitted from, and discharged to, hospitals. This accelerated back-and-forth, particularly in New York City, poses certain operational challenges for nursing homes, as discussed below. Implications By 2010, New York had fewer nursing facilities than in 1996; more of them were for-profit entities, but the state still had a far greater share of not-for-profit and public homes than the nation as a whole. An influx of short-term patients from hospitals, in need of post-acute care and rehabilitation services, significantly grew admissions over those 14 years, although the rate of increase slowed toward the end of that period. With slightly fewer nursing home beds, average occupancy remained at over 90 percent. This rate well above the national average may well indicate that, in the long run, New York s current nursing home market will be challenged to satisfy increased demand stemming from an aging baby boomer population. The growing short-term population presents a number of operational challenges for nursing homes. At the most basic level, these patients have different expectations and demands from evening and weekend admissions to private rooms and bathroom facilities. Along with adding costs for environmental improvements, their preferences can affect nursing home ratings: since the regulatory framework for nursing homes is based on a residential model rather than a clinical one, state licensure requires home-like amenities, such as congregate dining and activity programs, and penalizes homes if residents do not use those services. Short-term patients generally want to be separate from long-term residents, and often don t participate in congregate meals and activities, and thus can lower facilities scores. More critical, as post-acute patients, this population is in need of more intensive medical and rehabilitative services, requiring new staffing patterns. It is not these short-stay patients alone, however, who are increasing staffing needs. As discussed below, nursing homes have had to devote increasing resources to caring for users including long-term residents who, on average, have more complex health needs and declining functional status than in the past. 1 0 M E D I C A I D I N S T I T U T E A T U N I T E D H O S P I T A L F U N D

16 Characteristics and Service Use of Nursing Home Patients and Residents Population Profiles This section of the report examines the demographics, functional limitations, and health characteristics of nursing home users, as well as their utilization patterns during nursing home stays. The trends first reported in Changes in Nursing Home Care generally continued through While the proportion of elderly New Yorkers relying on nursing homes further declined, the rates of functional limitation, chronic diseases, mental illness, and obesity among long-stay residents increased. The distinctions between the health profiles of shortterm patients and long-term residents mean that nursing facilities may need to tailor care strategies to each group. Fewer Elderly Between 2000 and 2010, New Yorkers 65 or older became less reliant on nursing home care (Table 2). Notably, the entire decline in nursing home use was attributable to those 85 or older: in 2010, 12 percent of this age group were in nursing homes, down from 16 percent at the end of This decrease was greater outside New York City, falling from 18 percent in nursing homes in 2000 to 13 percent in Factors contributing to this diminished use of nursing homes by seniors include the expansion of the assisted living sector, greater availability of home care services, 14 and decreased morbidity among those 85 or older. 15 The share of individuals aged 65 to 84 in nursing homes remained flat across the decade. Table 2. Percent of Elderly in Nursing Facilities, New York State New York State Total New York City Rest of State % 2% 13% 2% 18% 2% % 2% 11% 2% 15% 2% % 2% 10% 2% 13% 2% Source: RCF4 nursing facility cost reports filed with the New York State Department of Health, , obtained through HANYS/FACETS. 13 The share of elderly New Yorkers in nursing homes expresses the relationship between the end-of-year nursing home census obtained from nursing home cost reports and an annual population estimate by Cornell University s Institute for Social and Economic Research. or 14 Decker FH Nursing Homes, : What Has Changed, What Has Not? Hyattsville, MD: National Center for Health Statistics. 15 Kramarow E, Lubitz J, Lentzner H, and Gorina Y. September/October Trends in the Health of Older Americans, Health Affairs 26(5): N E W Y O R K S N U R S I N G H O M E S : S H I F T I N G R O L E S A N D N E W C H A L L E N G E S 1 1

17 While the average age of nursing home users barely changed from 80.1 in 2000 to 79.1 in 2010 there were shifts in the age distribution of users (Figure 8). The number of users over age 65 declined by 12 percent, from over 100,000 at the end of 1996 to fewer than 90,000 at the end of Over the same period, the number of users under 65 increased by 60 percent, from about 9,000 to 15,000. Adults aged 21 to 64 have accounted for an increasing share of all nursing home users across the state, from 1996 to 2010, but make up a larger share of nursing home users in New York City. By 2010, these younger adults made up 20 percent of all nursing home users in the city, but only 10 percent in the rest of the state (Figure 9). Nationally, 14 percent of nursing homes Figure 8. Nursing Home Residents by Age Range at End of Year, New York State 60,000 50,000 40,000 30,000 20, , Source: RCF4 nursing facility cost reports filed with the New York State Department of Health, , obtained through HANYS/FACETS. Figure 9. Nursing Home Residents between 21 and 64, by Region 25% 20% 15% 10% New York City Rest of State 5% 0% Source: RCF4 nursing facility cost reports filed with the New York State Department of Health, , obtained through HANYS/FACETS. 1 2 M E D I C A I D I N S T I T U T E A T U N I T E D H O S P I T A L F U N D

18 users were under 65 in 2009, almost midway between utilization patterns in New York City and the rest of the state. 16 New York s shifting age distribution of nursing home users is thus attributable to a relatively small but growing contingent of non-elderly adults and a relatively large and declining contingent of seniors. More Disability Based on ADL scores a composite measure of key activities of daily living for which assistance is needed, including transferring, toileting, bed mobility, and eating nursing home users in 2010 had more functional limitations than those assessed in The level of disability slowly but gradually increased over that time period among both short-stay patients and long-stay residents (Figure 10). Figure 10. Mean Level of Disability by Length of Stay (ADL Scores), New York State Long-Stay Short-Stay Source: Minimum Data Set (MDS) data for all New York State nursing homes ; analysis provided by Leading Age New York/EQUIP for Quality under CMS DUA #08591 and NYS DUA # CMS N E W Y O R K S N U R S I N G H O M E S : S H I F T I N G R O L E S A N D N E W C H A L L E N G E S 1 3

19 Multiple Health Conditions Both short-stay patients and long-stay residents tend to have multiple diagnoses (Figure 11). Between 2000 and 2010, the average number of diagnoses among long-stay residents grew from about 5 to 6, while the number of diagnoses among short-stay patients remained between 4.5 and 5. Deterioration in the health of long-stay residents over time is consistent with the decline in nursing home use by the elderly overall. As healthier seniors make use of home-based care, individuals with more complex medical conditions or severe functional limitations who cannot be cared for in other settings will continue to require a nursing home setting. The implication is that, over time, a growing share of residents will have intensive needs. Figure 11. Mean Number of Diagnoses by Length of Stay, New York State Long-Stay Short-Stay Source: Minimum Data Set (MDS) data for all New York State nursing homes ; analysis provided by Leading Age New York/EQUIP for Quality under CMS DUA #08591 and NYS DUA # M E D I C A I D I N S T I T U T E A T U N I T E D H O S P I T A L F U N D

20 Long-stay residents and short-stay patients were equally likely, in 2010, to be diagnosed with heart disease or circulatory conditions (82 percent of each group) and nearly so for musculoskeletal conditions 17 (42 percent of long-stay residents and 39 percent of short-stay patients (Figure 12). The significant incidence of these conditions is consistent with both groups being predominantly elderly. Neurologic diseases 18 were far more likely to be diagnosed among long-stay residents (75 percent versus 39 percent), again consistent with their need for residential placement; this is, notably, the only disease category in which longstay residents differed substantially from short-stay patients. Other conditions were minimally less prevalent among long-stay residents: pulmonary disease (19 percent versus 24 percent), cancer (7 percent versus 12 percent), and renal failure (8 percent versus 13 percent). Figure 12. Selected Diagnostic Groupings by Length of Stay, 2010, New York State 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Long-Stay Short-Stay Source: Minimum Data Set (MDS) data for all New York State nursing homes ; analysis provided by Leading Age New York/EQUIP for Quality under CMS DUA #08591 and NYS DUA # Musculoskeletal conditions include arthritis, hip fracture, missing limb, osteoporosis, and pathological bone fracture. 18 Neurological conditions include dementias, aphasia, cerebral palsy, stroke, hemiplegia/hemiparesis, multiple sclerosis, paraplegia, Parkinson's disease, quadriplegia, seizure disorder, transient ischemic attack, and traumatic brain injury. N E W Y O R K S N U R S I N G H O M E S : S H I F T I N G R O L E S A N D N E W C H A L L E N G E S 1 5

21 Cognitive and Behavioral Health Issues Nearly half (46 percent) of all nursing home users had a cognitive impairment in 2010, with a greater prevalence, not surprisingly, among long-stay residents (67 percent versus 24 percent). Between 2000 and 2010, the rate of cognitive impairment among long-stay residents generally increased, while it decreased among short-stay patients (Figure 13). Psychiatric conditions including anxiety disorder, depression, bipolar illness, and schizophrenia were also common among New York s nursing home users, with more than half of long-stay residents, 56 percent, having at least one psychiatric diagnosis in While less likely to have such diagnoses, the short-stay population, too, exhibited a high prevalence of these conditions, with more than one in three (36 percent) having at least one diagnosed psychiatric condition. The share of long-term residents with a psychiatric diagnosis grew substantially over time, from 36 percent in 2000 to 56 percent in 2010; the increase among short-stay patients was more modest (Figure 14). Figure 13. Nursing Home Users with Cognitive Impairments by Length of Stay, New York State 80% 60% 61% 63% 67% 40% 20% 28% 24% 24% Long-Stay Short-Stay 0% Source: Minimum Data Set (MDS) data for all New York State nursing homes ; analysis provided by Leading Age New York/EQUIP for Quality under CMS DUA #08591 and NYS DUA # M E D I C A I D I N S T I T U T E A T U N I T E D H O S P I T A L F U N D

22 In 2010, long-stay residents were more than twice as likely as short-stay patients (27 percent versus 12 percent) to display behaviors such as wandering, physical abusiveness, verbal abusiveness, social inappropriateness, or resisting care. The proportions of both long-stay residents and short-stay patients exhibiting these behaviors declined modestly over time, however (Figure 15). Figure 14. Nursing Home Users with Psychiatric Diagnoses by Length of Stay, New York State 60% 56% 48% 40% 36% 28% 32% 36% Long-Stay 20% Short-Stay 0% Source: Minimum Data Set (MDS) data for all New York State nursing homes ; analysis provided by Leading Age New York/EQUIP for Quality under CMS DUA #08591 and NYS DUA # Figure 15. Nursing Home Users with Behavioral Symptoms* by Length of Stay, New York State 30% 28% 27% 24% 20% 10% 15% 12% 12% Long-Stay Short-Stay 0% *Behavioral symptoms include wandering, physical abusiveness, verbal abusiveness, social inappropriateness, and resisting care. Source: Minimum Data Set (MDS) data for all New York State nursing homes ; analysis provided by Leading Age New York/EQUIP for Quality under CMS DUA #08591 and NYS DUA # N E W Y O R K S N U R S I N G H O M E S : S H I F T I N G R O L E S A N D N E W C H A L L E N G E S 1 7

23 Increased Obesity Over the past ten years, mean body mass index (BMI) for both short-stay patients and longstay residents increased from approximately 24.5 to over 26.5, moving from the category of normal weight ( ) to overweight ( ). At the same time, the proportions of both short-stay patients and long-stay residents who are classified as obese (with a BMI of 30 or greater) have also increased, rising from 16 percent and 15 percent, respectively, in 2000, to 26 percent and 24 percent (Figure 16). Obesity contributes to the increase in functional limitations (Figure 10), diabetes (Figure 12), and heart disease (Figure 12) noted above, and has implications for care, including staffing and equipment needed to accommodate these individuals. Figure 16. Obese* Nursing Home Users by Length of Stay, New York State 30% 25% 20% 15% 10% Long-Stay Short-Stay 5% 0% *Obesity = BMI 30 or greater. Source: Minimum Data Set (MDS) data for all New York State nursing homes ; analysis provided by Leading Age New York/EQUIP for Quality under CMS DUA #08591 and NYS DUA # M E D I C A I D I N S T I T U T E A T U N I T E D H O S P I T A L F U N D

24 Use of Health Services Health services utilization in nursing homes differs between short-stay patients and long-stay residents, again underscoring the need for nursing facilities to accommodate two distinct populations. Therapy Almost Exclusively Short-Stay Consistent with short-stay patients use of nursing homes for post-acute rehabilitation, 86 percent of these patients received physical therapy and 81 percent received occupational therapy in Although that was a substantial increase since 2000, even at the beginning of the decade the majority of short-stay patients were already using these services 70 percent receiving physical therapy and 57 percent occupational therapy (Figure 17). Long-stay residents use physical and occupational therapy at drastically lower rates, since the focus, for this population, is not on rehabilitation. In 2010, only 15 percent of long-stay residents received physical therapy and 12 percent received occupational therapy. It is interesting to note that neither short-stay patients nor long-stay residents receive substantial amounts of speech or respiratory therapy. In 2010, speech therapy and respiratory therapy were each provided to approximately 3 percent of all nursing home users in New York. Figure 17. Nursing Home Users Receiving Therapy* by Length of Stay, New York State 90% Occupational Therapy 81% 90% Physical Therapy 86% 70% 60% 57% 60% Long-Stay 30% 30% Short-Stay 7% 12% 12% 15% 0% *Therapy provided in the last seven days before patient s/resident s final Medicare assessment of year. Source: Minimum Data Set (MDS) data for all New York State nursing homes ; analysis provided by Leading Age New York/EQUIP for Quality under CMS DUA #08591 and NYS DUA # % N E W Y O R K S N U R S I N G H O M E S : S H I F T I N G R O L E S A N D N E W C H A L L E N G E S 1 9

25 Increased Use of Medications Medication use by both groups of nursing home users has increased steadily since The average number of medications both over-the-counter and prescription taken by shortterm patients rose from approximately 9 in 2000 to 12 in For long-stay residents, the average of 7 medications at the beginning of the decade grew to 10.5 in The greater number of medications, on average, taken by short-term patients (Figure 18) is consistent with their higher rates of diabetes, pulmonary disease, cancer, and renal failure (Figure 12). Figure 18. Average Number of Medications* by Length of Stay, New York State Long-Stay Short-Stay *Medications received in the last seven days before patient s/resident s final Medicare assessment of year. Source: Minimum Data Set (MDS) data for all New York State nursing homes ; analysis provided by Leading Age New York/EQUIP for Quality under CMS DUA #08591 and NYS DUA # Hospital Admissions Show Geographic Differences Throughout the decade, long-stay residents in New York City facilities had consistently higher rates of inpatient hospitalizations during their nursing home stays than nursing home residents in the rest of the state in 2010, an average of 1.5 hospitalizations per year, compared to an average of 1.15 in the rest of the state. In both regions, the average number of hospitalizations per resident per year increased over time, from 1.2 in New York City and 0.95 in the rest of the state in M E D I C A I D I N S T I T U T E A T U N I T E D H O S P I T A L F U N D

26 Implications New York s nursing homes serve two populations that, while sharing some common characteristics, are also significantly different. Both long-stay residents and short-stay patients have substantial functional impairments and typically have multiple significant medical diagnoses. Cognitive impairments and behavioral conditions are the norm for long-stay residents and are common for short-stay patients. Obesity is prevalent across the board. Over time, both groups exhibit greater functional impairment and more medical diagnoses. At the same time, the goal of returning post-acute short-stay patients to greater functionality requires a different array of services for them. Nearly all short-stay patients receive occupational or physical therapy, for example, and the norm is to receive both. In contrast, it is the exception for long-stay residents to receive these or other therapies. Nursing home leaders indicate that they are now in the business of caring for two distinct populations in a single facility. Increasingly intensive medical needs in both populations and a growing demand for rehabilitation services will continue to challenge their facilities allocation of staff and other resources. N E W Y O R K S N U R S I N G H O M E S : S H I F T I N G R O L E S A N D N E W C H A L L E N G E S 2 1

27 Financial Characteristics This section examines patterns and trends in the financial performance of nursing homes in New York. It analyzes admissions, days, and revenue by payer, followed by costs and operating performance, and considers significant differences by region and sponsorship. Shifting Payment Sources Reflect Changing User Mix Since 1996, the source of payment for admissions to nursing homes has shifted dramatically. Over that period, Medicare admissions increased by 143 percent, from about 46,000 to 111,000. That growth tapered, however, after 2005, and Medicare admissions have remained roughly flat since then (Figure 19). Nursing home users who were covered, at admission, by other non-medicare/non-medicaid sources including commercial health insurance, self-pay, Figure 19. Nursing Home Admissions by Primary Source of Payment, New York State 120, ,000 80,000 60,000 40,000 Medicaid Medicare All Other 20, Source: RCF4 nursing facility cost reports filed with the New York State Department of Health, , obtained through HANYS/FACETS. private long-term care insurance, and public payers such as the Veterans Administration and Department of Defense quintupled, from about 11,000 in 1996 to 55,000 in Annual Medicaid admissions remained relatively steady throughout the period, at an average of 24,000. but Medicaid Remains the Dominant Payer Although Medicare admissions increased, Medicaid remains the dominant payer of nursing home care in New York. Medicaid s role includes its responsibility for nursing home users who are dually eligible for both Medicare and Medicaid. While Medicare is generally the payer upon admission, payment for these duals falls to Medicaid once they become long-term residents. In 2010, Medicaid covered three out of four nursing home days (76 percent), slightly down from 79 percent in In keeping with the large increase in short-stay patients, the share of 2 2 M E D I C A I D I N S T I T U T E A T U N I T E D H O S P I T A L F U N D

28 days paid by Medicare, including Medicare managed care plans, increased slightly from 9 percent in 1996 to 13 percent in 2010, but Medicare remains a minor payer compared to Medicaid (Figure 20). The percent of days paid for by other sources was relatively consistent across that time period, standing at 11 percent in While Medicaid s share of nursing home days barely decreased over the study period, its share as a source of nursing home revenue declined consistently, from 74 percent in 1996 to 65 percent in 2010 (Figure 21). Simultaneously, the share of revenue from Medicare, including Medicare managed care plans, increased from 12 percent to 19 percent. As with the share of days by payer, the share of revenue from other sources remained consistent throughout the study period. Figure 20. Patient Days by Payer, New York State 100% 80% 12% 13% 11% 11% 9% 9% 12% 13% 60% 40% 79% 78% 77% 76% All Medicaid Other Medicare Medicaid All Other 20% 0% Source: RCF4 nursing facility cost reports filed with the New York State Department of Health, , obtained through HANYS/FACETS. Figure 21. Net Patient Revenue by Payer, New York State 100% 14% 16% 15% 16% 80% 12% 15% 16% 19% 60% All Medicaid Other 40% 74% 70% 69% 65% Medicare Medicaid All Other 20% 0% Source: RCF4 nursing facility cost reports filed with the New York State Department of Health, , obtained through HANYS/FACETS. N E W Y O R K S N U R S I N G H O M E S : S H I F T I N G R O L E S A N D N E W C H A L L E N G E S 2 3

29 The shift in nursing home revenue away from Medicaid and toward Medicare is consistent with the small decline in Medicaid s share of patient days, reflecting the declining numbers of long-stay residents (Figure 3), who are typically covered by Medicaid. But a second and potentially larger factor in the declining share of revenue from Medicaid is the relatively slow growth in Medicaid payment rates. In 2010, Medicaid payments to New York s nursing homes totaled $6.9 billion, just 30 percent more than the $5.3 billion received at the beginning of the study period in That is reflected in the lower average per user per day payment by Medicaid than by other payers. In 2010, Medicaid revenue per user day was $247 statewide, while Medicare revenue was $436 per user day. Medicaid revenue per user day, which increased by 58 percent between 1996 and 2010, experienced slower growth than the average revenue from other payers (Figure 22); this was partly due to the trend factor, which New York State reduced and ultimately eliminated in In contrast, Medicare revenue per user day increased by 113 percent over the study period, and revenue per user day from all other sources of payment increased by 109 percent. Figure 22. Average Revenue Per User Day by Payer, New York State $500 $400 $300 $200 Medicaid Medicare All Other $100 $ Source: RCF4 nursing facility cost reports filed with the New York State Department of Health, , obtained through HANYS/FACETS. Payer Mix: Differences by Sponsorship and Region For the state as a whole, the shares of nursing home days covered by different payers vary little between for-profit and not-for-profit facilities. For-profit nursing homes rely slightly more on Medicaid, which covered 77 percent of their days in 2010, compared to 74 percent of nonprofits days. In turn, not-for-profit facilities rely slightly more than for-profits 13 percent 19 United Hospital Fund analysis of CMS Form 64 data. 2 4 M E D I C A I D I N S T I T U T E A T U N I T E D H O S P I T A L F U N D

30 of days in 2010, compared to 9 percent on private funding streams, namely commercial health coverage, private long-term care insurance, and direct pay. Payer mix differs noticeably, however, between New York City and the rest of the state. Nursing homes in New York City rely more on Medicaid, which paid for about 82 percent of days there and only 72 percent in the rest of the state in Facilities outside of New York City have a larger share of days paid for by sources other than Medicare and Medicaid 14 percent in 2010, compared to 7 percent in the city again reflecting greater reliance on commercial health coverage, private long-term care insurance, and direct pay. Average Revenues: Differences by Sponsorship and Region Not-for-profit nursing homes in New York City earn more revenue per user per day than forprofit nursing homes in the city and all nursing homes in the rest of the state. In 2010, the city s not-for-profits received 51 percent more per user per day ($459) than for-profit facilities there ($305), as well as 73 percent more than for-profits ($266) and 84 percent more than notfor-profits ($250) outside of New York City. Higher revenue in New York City for both not-for-profit and for-profit facilities is tied to the city s higher labor and capital costs. That differential has been consistent across the entire study period, with the gap growing over time (Figure 23). In 1996, the average revenue per user per day in New York City not-for-profit homes ($246) was 39 percent higher than that of for-profit homes there ($177); it was also 73 percent greater than average revenues of for-profits ($143), and 72 percent greater than those of not-for-profits ($143), in the rest of the state. Figure 23. Average Revenue Per User Day by Sponsorship and Region $500 $400 $300 $200 $100 Not-for-Profit - NYC For-Profit - NYC Not-for-Profit - Rest of State For-Profit - Rest of State $ Source: RCF4 nursing facility cost reports filed with the New York State Department of Health, , obtained through HANYS/FACETS. N E W Y O R K S N U R S I N G H O M E S : S H I F T I N G R O L E S A N D N E W C H A L L E N G E S 2 5

31 Not-for profit homes in New York City also experienced the greatest increase in average revenue per user per day over the course of the study period, growing by 87 percent between 1996 and But for-profit nursing homes in the rest of the state were not far behind, with an increase of 86 percent. In contrast, for-profit facilities in New York City and not-for profit nursing homes outside of the city experienced less growth 72 percent and 74 percent, respectively in revenue. Notably, for-profit facilities revenues were greater in New York City than outside the city throughout the study period. Operating Costs and Financial Performance As with revenue, average total costs per user per day were highest for not-for-profit nursing homes in New York City. In 2010, the average total cost at these facilities ($467) was 58 percent higher than the average cost for for-profit facilities in the city ($296), and 80 percent higher than costs for both for-profit ($260) and not-for-profit ($260) nursing homes in the rest of the state. As with revenue, across the entire study period not-for-profit facilities in New York City consistently had higher costs than their for-profit counterparts (Figure 24). Higher workforce costs in New York City, partly due to the larger role of organized labor, contribute to the cost spread between the city and the rest of the state. Figure 24. Average Cost Per User Day by Sponsorship and Region $500 $400 $300 $200 $100 Not-for-Profit - NYC For-Profit - NYC Not-for-Profit - Rest of State For-Profit - Rest of State $ Source: RCF4 nursing facility cost reports filed with the New York State Department of Health, , obtained through HANYS/FACETS. Between 1996 and 2010, for-profit nursing homes outside New York City experienced the largest increase in average cost per user per day (94 percent). Costs increased by 92 percent for not-for-profit facilities in New York City, 85 percent for for-profit facilities in New York City, and 81 percent for not-for-profit facilities outside the city. 2 6 M E D I C A I D I N S T I T U T E A T U N I T E D H O S P I T A L F U N D

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