Skilled Nursing Facilities: Available Data Show Average Nursing Staff Time Changed Little after Medicare Payment Increase

The nations 15,000 skilled nursing facilities (SNF) play an essential role in our health care system, providing Medicare-covered skilled nursing and rehabilitative care each year for 1.4 million Medicare patients who have recently been discharged from acute care hospitals. In recent years, many analysts and other observers, including members of the Congress, have expressed concern about the level of nursing staff in SNFs and the impact of inadequate staffing on the quality of care. In 2000, the Congress responded to these concerns with a temporary increase in Medicare payment intended to encourage SNFs to increase their nursing staff.

Medicare pays SNFs through a prospective payment system (PPS) in which they receive a fixed amount for each day that a patient receives care. This daily payment rate varies according to a patients expected needs for care, and is the sum of nursing, therapy, and routine cost components.The Congress, through the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA), increased the nursing component of the PPS SNF rate by 16.66 percent, effective April 1, 2001. This raised the overall SNF payment rates by 4 to 12 percent, depending on the patients expected care needs. However, the law did not require facilities to spend this additional money on nursing staff. This was not the only recent legislative change to SNF payments. A year earlier, payment rates for certain types of patients had been increased by 20 percent, and for fiscal years 2001 and 2002, overall rates were boosted by 4 percent. The nursing component increase expired on October 1, 2002, and the Congress is considering whether to reinstate it.

BIPA directed us to assess the impact of the increase in the nursing component on SNF nurse staffing ratios. The law also required that we recommend whether the increased payments should continue. Specifically, this report examines whether nurse staffing ratios overall and for categories of SNFs, such as for-profit and not-for-profit facilities rose after April 1, 2001, when the payment increase took effect.