Public Reporting of Nursing Home Quality: Does It Pay Off?

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Vivien Melton
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1 Public Reporting of Nursing Home Quality: Does It Pay Off? Jeongyoung Park University of Pennsylvania Co-authors: Rachel M. Werner R. Tamara Konetzka Funding: AHRQ (R01-HS ) 1

2 Public Reporting of Quality Anticipated impact of report cards is two-fold Increasing demand for high quality Motivating providers to compete on quality Minimal evidence about the success of report cards in improving quality Little research on the providers costs of improving quality or their return on investment 2

Minimal evidence about the success of report cards in improving quality Little

3 Why Might Report Cards Impact Financial i Performance? If successful, high-scoring h i providers should achieve better financial performance Revenues: Revenues increase through increased market share Expenses: Quality improvement may increase resource use and costs in the short term, but may recoup costs in the long term Profits: Ultimately increase profit margins 3

Revenues: Revenues increase through increased market share Expenses: Quality improvement

4 Does Quality Pay? Providers are skeptical about the impact of report cards, esp. their use of consumers Financial effects are poorly understood If there are financial benefits to public reporting, it may convince providers to strive for high quality 4

5 Objective To examine whether nursing homes with high report card scores or improved scores reap economic rewards from public reporting 5

6 Financial performance Medicare Cost Reports Data Reported quality measures Minimum Data Set Facility characteristics Online Survey Certification and Reporting System Limited to freestanding skilled nursing facilities 7,521 SNFs with 47,342 observations

Certification and Reporting System Limited to freestanding

7 Empirical Model F it = β(nhc t ) + γx it + i + ε it F it : financial performance - operating, total margin NHC t : Nursing Home Compare (in 2002) indicator - pre ( ) vs. post ( ) 2005) X it : time-varying covariates i : SNF fixed-effects effects Stratified by 15 reported quality measures 12 chronic and 3 post-acute 7

8 15 Quality Measures Mean (%) SD Long-Stay: need for help with daily activities moderate to severe pain pressure sores (high-risk) h pressure sores (low-risk) physically restrained depressed d or anxious lose control of their bowls or bladder (low-risk) catheter inserted and left in their bladder in bed or in a chair ability to move about in/around their room got worse urinary track infection lose too much weight Short-Stay: delirium moderate to severe pain pressure sores

40 lose control of their bowls or bladder (low-risk) 47.53 13.80 catheter inserted and left in their bladder 5.85 3.97 in bed or in a chair 4.84 5.

9 Stratification By reported score High-scoring (N=944): all 15 QMs above median after NHC Middle-scoring (N=5,617) Low-scoring (N=960): all 15 QMs below median after NHC By improvement Improved (N=1 1,652): any positive change in all 15 QMs No change (N=5,354) Worse (N=515): any negative change in all 15 QMs 9

below median after NHC By improvement Improved (N=1 1,652): any positive

10 Results: By Reported Score Operating Marg in Total Marg in 2.50 pre vs. post: 0.99** pre vs. post: 0.42*** pre vs. post: pre vs. post: 0.02 pre vs. post: 0.18 pre vs. post: High scoring Middle scoring Low scoring High scoring Middle scoring Low scoring Pre NHC ( ) Post NHC ( ) *** p<0.001, ** p<0.01, * p<

11 Results: By Improvement Operating Marg in Total Marg in 2.50 pre vs. post: 1.01*** pre vs. post: 0.39** pre vs. post: pre vs. post: 0.51* pre vs. post: 0.29* pre vs. post: 0.83* 0.50 Improved No change Worse Improved No change Worse Pre NHC ( ) Post NHC ( ) *** p<0.001, ** p<0.01, * p<

12 Results: Among Improved All Improved High-scoring Middle-scoring Low-scoring Facilities (N=66) (N=1,171) (N=415) (N=1,652) Operating Margin 0.51* 2.68* Total Margin 1.01*** 2.93* 1.03*** 0.62 *** p<0.001, 001 ** p<0.01, 01 * p<

(N=415) (N=1,652) Operating Margin 0.51* 2.68* 0.49 0.

13 How Quality Pays Consumer response Changes in market share Occupancy increased for facilities with high-scores and improved scores, which partially supports for a theoretical mechanism of public reporting Provider (dysfunctional) response Changes in payer-mix or severity No significant changes in % more profitable residents (e.g. Medicare/private-pay pay or RUG rehab) 13

public reporting Provider (dysfunctional) response Changes in payer-mix or severity No

14 Summary Incentives inherent in public reporting appear to be working as intended d High-scoring nursing homes and those with improvement gain financial benefits Improvement counts, but absolute score also matters Improvers with low-scores don t reap economic rewards Over time, this may reduce the ability of low-scoring facilities to respond to quality improvement incentives 14

counts, but absolute score also matters Improvers with low-scores don t reap economic rewards

15 Implications Justifies expenditures or organizational changes to increase performance A Business Case for Quality Under proposed nursing home P4P Reward improvement in addition to absolute achievement Safeguards necessary to ensure that low-quality providers have necessary resources to improve 15

Reward improvement in addition to absolute achievement Safeguards

Trends in Publicly Reported Nursing Facility Quality Measures

Trends in Publicly Reported Nursing Facility Quality Measures American Health Care Association Reimbursement and Research Department January 2011 Trends in Publicly Reported Nursing Facility Quality Measures