Effects of Medicare Payment Changes on Nursing Home Staffing and Deficiencies

R. Tamara Konetzka, Deokhee Yi, Edward C. Norton, Kerry E. Kilpatrick

Research output: Contribution to journalArticlepeer-review

97 Citations (Scopus)


Objective. To investigate the effects ofMedicare’s Prospective Payment System(PPS) for skilled nursing facilities (SNFs) and associated rate changes on quality of care as represented by staffing ratios and regulatory deficiencies.
Data Sources. Online Survey,Certification and Reporting (OSCAR) data from1996–2000 were linked with Area Resource File (ARF) and Medicare Cost Report data to form a panel dataset.
Study Design. A difference-in-differences model was used to assess effects of the PPS and the BBRA (Balanced Budget Refinement Act) on staffing and deficiencies, a design that allows the separation of the effects of the policies from general trends. Ordinary
least squares and negative binomial models were used.
Data Collection Methods. The OSCAR and Medicare Cost Report data are selfreported by nursing facilities; ARF data are publicly available. Data were linked by provider ID and county.
Principal Findings. We find that professional staffing decreased and regulatory deficiencies increased with PPS, and that both effects weremitigatedwith the BBRArate increases. The effects appear to increase with the percent of Medicare residents in the facility except , in some cases, at the highest percentage of Medicare. The findings on staffing are statistically significant. The effects on deficiencies, though exhibiting consistent signs and magnitudes with the staffing results, are largely insignificant.
Conclusions. Medicare’s PPS system and associated rate cuts for SNFs have had a negative effect on staffing and regulatory compliance. Further research is necessary to determine whether these changes are associated with worse outcomes. Findings from
this investigation could help guide policy modifications that support the provision of quality nursing home care.
Original languageEnglish
Pages (from-to)463-487
Number of pages25
JournalHealth Services Research
Issue number3
Early online date4 May 2004
Publication statusPublished - Jun 2004


  • Nursing home quality
  • Medicare
  • prospective payment
  • staffing
  • deficiencies


Dive into the research topics of 'Effects of Medicare Payment Changes on Nursing Home Staffing and Deficiencies'. Together they form a unique fingerprint.

Cite this