Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
M N H
E  DICARE  URSING  OME 
 
R H
ES  IDENT  OSPITALIZATION 
 
R M A
ATES  ERIT  DDITIONAL 
 
 
M  
ONITORING 
 
 
Daniel R. Levinson   
Inspector General  
 
November 2013 
OEI-06-11-00040   
   
EXECUTIVE SUMMARY:  MEDICARE NURSING HOME RESIDENT 
HOSPITALIZATION RATES MERIT ADDITIONAL MONITORING 
OEI-06-11-00040 
 
WHY WE DID THIS STUDY 
 
Nursing homes hospitalize residents when physicians and nursing staff determine that 
residents require acute-level care. Such transfers to hospitals provide residents with 
access to needed acute-care services.  However, hospitalizations are costly to Medicare, 
and research indicates that transfers between settings increase the risk of residents 
experiencing harm and other negative care outcomes.  High rates of hospitalizations by 
individual nursing homes could signal quality problems within those homes.   
 
HOW WE DID THIS STUDY  
 
We used administrative and billing data both for nursing homes and hospitals to identify  
all Medicare residents in Medicare- or Medicaid-certified nursing homes who 
experienced hospitalizationsi.e., transfers to hospitals for inpatient staysin fiscal year 
(FY) 2011. We included all Medicare nursing home residentsthose in Medicare-paid 
skilled nursing and rehabilitative (referred to as SNF) stays and those in nursing home  
stays not paid for by Medicare, which include long-term care (LTC) stays)in our 
analysis.  We calculated the percentage of Medicare nursing home residents that each  
nursing home hospitalized.  We identified the diagnoses associated with these 
hospitalizations, calculated Medicare reimbursements for the hospital stays, and 
calculated the rates and costs of hospitalizations of nursing home residents.  We also 
examined the extent to which annual rates of resident hospitalizations varied among 
individual nursing homes. 
 
WHAT WE FOUND 
 
In FY 2011, nursing homes transferred one quarter of their Medicare residents to 
hospitals for inpatient admissions, and Medicare spent $14.3 billion on these 
hospitalizations. Nursing home residents went to hospitals for a wide range of 
conditions, with septicemia the most common.  Annual rates of Medicare resident 
hospitalizations varied widely across nursing homes.  Nursing homes with the following 
characteristics had the highest annual rates of resident hospitalizations:  homes located in 
Arkansas, Louisiana, Mississippi, or Oklahoma and homes with one, two, or three stars in 
the Centers for Medicare & Medicaid Services (CMS) Five-Star Quality Rating System.     
 
WHAT WE RECOMMEND 
 
In its comments on the draft report, CMS concurred with both of our recommendations 
to: (1) develop a quality measure that describes nursing home resident hospitalization 
rates and (2) instruct State survey agencies to review the proposed quality measure as part 
of the survey and certification process. 
   
 
   
   
TABLE OF CONTENTS 
 
Objectives ....................................................................................................1 

Background..................................................................................................1 

Methodology................................................................................................6 

Findings......................................................................................................10 

One-quarter of Medicare nursing home residents experienced          

hospitalizations in FY 2011, and Medicare spent $14.3 billion   

on these hospitalizations ................................................................10 

Nursing home residents went to hospitals most commonly for 
septicemia, pneumonia, and congestive heart failure ....................11
  
Nursing homes annual rates of resident hospitalization varied 

according to select characteristics, including geographic       

location and rating in CMSs Five-Star Quality Rating System ....13 

Conclusion and Recommendations ............................................................17 

Agency Comments and Office of Inspector General Response .....18 

Appendixes ................................................................................................19 

A: Nursing Home Quality Measures .............................................19 

B: Detailed Methodology for Categorizing the Primary                

Diagnosis Codes on Hospital Claims .............................................20 

C: Average Annual Rate of Hospitalization of Nursing           

Home Residents by State ...............................................................21 

D: Agency Comments  ...................................................................22 

Acknowledgments......................................................................................24 

 
 
   
 
   
   
OBJECTIVES 
1. 	  To determine the percentage of Medicare nursing home residents 
hospitalized in fiscal year (FY) 2011 and the associated costs to 
Medicare. 
2. 	  To identify the medical conditions most commonly associated with 
these hospitalizations.   
3. 	  To determine the extent to which these hospitalization rates varied 
across nursing homes. 
4. 	  To determine the extent to which these hospitalization rates varied 
according to select nursing home characteristics.   
BACKGROUND 
Nursing homes send residents to hospitals when physicians or nursing 
staff determine that residents require acute-level care.  These transfers to 
hospitals provide residents with access to needed acute-care services.1    
However, research indicates that transfers between health care facilities 
increase the risk of residents experiencing harm and other negative care 
outcomes and that these hospitalizations are costly to Medicare.2 The 
harm that residents experience during hospitalizations can include 
disruption of their care plans, disorientation, stress, and iatrogenic illness 
(e.g., adverse events).3, 4, 5  The Centers for Medicare & Medicaid Services 
(CMS), in its 2012 Nursing Home Action Plan, suggests that negative 
outcomes associated with hospitalizations are further complicated because 
health care providers often do not communicate critical information when 
transferring the residents.6  Financial costs associated with hospitalizations  
of nursing home residents include, but are not limited to, Medicare 
 
1 D. Saliba, Appropriateness of the Decision to Transfer Nursing Facility Residents to  
the Hospital, Journal of the American Geriatrics Society, 48, 2, 2000,  p. 155. 
 
2 Assistant Secretary for Planning and Evaluation (ASPE), Hospitalizations of  Nursing 
 
Home  Residents:   Background and Options, June 2011,  p. 1. 
 
3 D. Saliba, op. cit., pp. 154155. 

4 J.G.  Ouslander, Reducing Potentially Avoidable Hospitalizations of Nursing Home
  
Residents:  Results of a Pilot Quality Improvement Project, Journal of the American 

Medical Directors Association, 2009, p. 645. 

5 
 E. Hutt,  Precipitants of Emergency  Room Visits and  Acute Hospitalization in  Short-

Stay Medicare Nursing Home  Residents, Journal of the American Geriatrics Society, 

50, 2, 2002, pp. 223224. 

6 CMS, 2012 Nursing  Home Action Plan, 2012. Accessed at 

http://www.cms.gov/Medicare/Provider-Enrollment-and-
Certification/CertificationandComplianc/Downloads/2012-Nursing-Home-Action-
Plan.pdf on February  5, 2013. 

 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)   1 
 
   
   
reimbursements for hospital stays, physician services during these stays, 
and applicable copayments.   
Although nursing homes may hospitalize residents primarily for clinical 
reasons, research indicates that several nonclinical factors can also 
influence homes decisions to hospitalize residents.  These factors include 
the availability and training of nursing staff in the home, resident and 
family member preferences, and physician availability and preferences.7   
Additionally, research suggests that aspects of Medicare payment policies 
and other economic factors can influence hospitalization rates.8, 9  
Payment for Hospitalizations. Medicare pays for hospitalizations of 
nursing home residents primarily by reimbursing acute-care hospitals 
according to the Inpatient Prospective Payment System (IPPS).10 Under 
IPPS, hospitals may submit Medicare claims with codes from the Internal 
Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM 
codes) representing resident conditions and procedures for each hospital 
stay.11  Payment for most Medicare resident hospitalizations is determined 
largely by grouping the diagnosis and procedure codes into 
Diagnosis-Related Groups based on the average cost of care for residents 
with similar conditions.   
Nursing Homes 
There are two primary types of care for Medicare beneficiaries in nursing 
homes:  skilled nursing and rehabilitative care (referred to as SNF)12 and 
long-term care (LTC).  Over 90 percent of nursing homes can admit 
residents into either type of care, depending on their clinical needs.13   
 
7 ASPE, Hospitalizations of Nursing  Home Residents:  Background and  Options, 

June 2011, pp. 67.  

8  Ibid., pp. 814. 

9 Congressional Research Service (CRS), Medicare Hospital Readmissions:  Issues, 

Policy Options and PPACA [the Patient Protection and Affordable Care Act], 

September   21, 2010, pp. 1117.   
 
10 CMS does not pay all hospitals for  resident stays through the IPPS.  CMS pays several 
types of hospitals (e.g., critical access hospitals, inpatient psychiatric hospitals) and most 
hospitals in Maryland through alternate payment  methodologies.  CMS,  Pub. No. 100-04 
Medicare Claims Processing,  April 2004. Accessed at http://www.cms.gov/Regulations-
and-Guidance/Guidance/Transmittals/downloads/R156CP.pdf on March 18, 2013.     
11 The ICD-9-CM system assigns diagnoses  and procedure  codes associated with  hospital  
stays and is maintained  jointly by CMS and the National Center for Health  Statistics.  
CMS, Acute Inpatient PPS Overview, last modified  February 22, 2010. Accessed at 
http://www.cms.gov/AcuteInpatientPPS/01_overview.asp on  March 18, 2013.   
12 In this report, we use the commonly used acronym for skilled nursing facility (SNF) 
to describe residents in skilled nursing and  rehabilitative stays covered  under Medicare 
Part A (i.e., SNF residents).    
13 Medicare Payment Advisory Committee (MedPAC), Report to the Congress:   
Medicare Payment Policy, Skilled  Nursing Facility Services, March 2013, p.  161. 
 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)   2 
 
   
   
Federal law requires all nursing homes to provide residents with care that 
enables them to attain or maintain the highest practicable physical, mental, 
and psychosocial well-being.14 (In this report, we refer to all Medicare 
beneficiaries in nursing homes as residents or nursing home 
residents.) 
SNF Care in Nursing Homes. In 2011, about 20 percent of all hospitalized 
Medicare beneficiaries went to 1 of the 15,207 nursing homes for SNF 
care following their hospital stays.15  Examples of nursing home residents 
in SNF stays include those recovering from surgical procedures performed 
in hospitals (e.g., hip or knee replacements) or recovering from acute 
medical conditions (e.g., septicemia, urinary tract infection, heart 
failure).16  In 2009, the Medicare Standard Analytical Files (SAF) 
categorized over 50 percent of residents in Medicare Part A SNF care as 
having illnesses of major or extreme severity.17      
Medicare beneficiaries have access to SNF care benefits through Medicare 
Part A.  Medicare coverage of SNF care is typically limited to 100 days 
per benefit period.18 Examples of services provided to SNF residents 
include the development, management, and evaluation of resident care 
plans; physical therapy; administration of intravenous feedings; insertion 
of suprapubic catheters; medication management; and wound care.  CMS 
pays for SNF care when residents have preceding hospital stays of at least 
3 days and a medical professional verifies the need for nursing and 
rehabilitative care related to the hospitalizations.19  In 2011, Medicare  
Part A paid $32 billion for SNF stays for Medicare beneficiaries.20    
LTC in Nursing Homes. Nursing home residents in LTC stays typically 
need assistance accomplishing two or  more activities of daily living 
(e.g., eating, bathing, dressing, walking).  This group includes, but is not 
limited to, Medicare beneficiaries who are also enrolled in a State 
Medicaid program (known as dual eligibles).   
State Medicaid requirements specify that nursing home residents in LTC 
stays must have access to several services including basic nursing care, 
 
14 Social Security Act  1819 (b)(2) and  1919  (b)(2). 
15
 MedPAC, Report to the Congress:  Medicare Payment Policy, Skilled Nursing Facility 

Services, March 2013, p.  161. 

16 Ibid. 

17 Avalere Publishing, Medicare SAF Data Book, 2009, p. 27. 

18 CMS, Medicare Benefit Policy Manual:  Duration of Covered  Inpatient  Services, 

Chapter 3,  October 1,  2003.  
19 CMS, Medicare Benefit Policy Manual: Coverage of Extended Care (SNF) Services 
Under Hospital Insurance, Chapter 8, April 4, 2012. 
20 MedPAC, Report to the Congress:  Medicare Payment Policy, Skilled Nursing Facility 
Services, March 2012, p.  171. 
 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)   3 
 
   
   
medical-related social services, pharmaceutical services, specialized 
rehabilitative services, individualized dietary services, emergency dental 
services, and other quality-of-life services.21  Medicare Part A does not pay 
for LTC stays in nursing homes, but Medicare Part B may pay for certain 
LTC services (e.g., enteral nutrition) for these nursing home residents.22,  23   
Payment for Medicare beneficiaries nursing home LTC comes from  
sources other than Medicaid, including personal resources, LTC insurance, 
or (if beneficiaries are dual eligibles) Medicaid.    
Medicare Oversight of Nursing Homes 
CMS verifies that Medicare- and Medicaid-certified nursing homes 
comply with Federal requirements.24  It enters into agreements with State 
survey agencies to conduct onsite reviews of each nursing home to certify 
compliance with Federal requirements.25   When surveyors identify 
noncompliance, CMS requires nursing homes to submit plans of 
correction and to correct the problems.  If nursing homes do not correct 
the problems, CMS may take enforcement actions.  These actions include 
imposing civil monetary penalties, denying payment for new admissions 
of Medicare residents, or terminating the nursing home from  participation 
in Medicare and Medicaid.26   
Nursing Home Quality Measures. Nursing homes routinely collect 
resident assessment data at specific intervals during a nursing home stay, 
and CMS stores the assessment results in the Minimum Data Set (MDS).27   
CMS converts MDS data into 18 Quality Measures (QM).28, 29   The QMs 
 
21 CMS, Nursing Facilities. Accessed at http://www.medicaid.gov/Medicaid-CHIP-
Program-Information/By-Topics/Delivery-Systems/Institutional-Care/Nursing-Facilities-
NF.html  on  January 22, 2013.  
22
 CMS. What is  Long-Term Care?,  August 3, 2012.   Accessed at 
http://www.medicare.gov/longtermcare/static/home.asp on May 15, 2013 
23 
 Office of  Inspector General (OIG),  Medicare Part B Services During Non-Part A 
Nursing Home Stays:  Enteral Nutrient  Pricing, January 2010, pp. 2-4.  
24 Nursing Home Reform Act as part of the Omnibus Budget Reconciliation Act of 1987;  
42 CFR Part 483. 

25 42 CFR   488.308(a), 488.330(a)(1)(i), and CMS, Survey and Certification:  General 

Information, April, 11, 2013.  Accessed  at http://www.cms.gov/Medicare/Provider-
Enrollment-and-
Certification/SurveyCertificationGenInfo/index.html?redirect=/surveycertificationgeninf
 
o/   on May 15, 2013. 

26  42  CFR  488.402(d), 488.408,  and 488.456. 

27 CMS, MDS 3.0 for Nursing  Homes and Swing  Bed Providers.  Accessed at 

http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-
Instruments/NursingHomeQualityInits/NHQIMDS30.html on March 4, 2013.    
28 CMS, Nursing Home Quality Initiative:  Quality Measures. Accessed at 
http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-
Instruments/NursingHomeQualityInits/NHQIQualityMeasures.html on  April 16, 2013. 
29 See Appendix A for a complete listing of the 18  QMs.  
 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)   4 
 
   
   
indicate how well a nursing home provides care to its residents.  Examples 
of QMs include the percentage of residents who report moderate to severe 
pain, the percentage of residents who were appropriately given the 
seasonal influenza vaccine, and the percentage of residents who have lost 
significant amounts of weight.30  CMS provides QMs to nursing homes for 
them to use in quality improvement efforts.  Currently, the QMs do not 
include a measure of how often nursing homes hospitalize residents.   
Public Reporting of QMs and Other Data Through the Five-Star Quality 
Rating System.   CMS publicly reports nursing home QMs through the 
Five-Star Quality Rating System.  CMS gives each Medicare- and 
Medicaid-certified nursing home an overall rating between one and five 
stars. A rating of one star indicates that a nursing home is much below 
average in terms of quality, and a rating of five stars indicates that a 
nursing home is much above average.31   
CMS bases the overall five-star rating on the nursing homes ratings in 
three areas: performance on inspection surveys (survey metric), QMs 
(quality metric), and staffing (staffing metric).  CMS calculates these three 
metrics as follows: 
 	  The survey metric is based on points assigned to the results of 
nursing home surveys, complaint surveys, and survey revisits 
conducted within the last 3 years.   
	   The quality metric is based on nursing homes performance on    
10 QMs.  Seven of the QMs relate to LTC residents (e.g., mobility 
decline, use of physical restraints), and the three remaining QMs 
relate to SNF residents (e.g., delirium, level of pain).   
	   The staffing metric is based on registered nurse (RN) hours per 
resident day and total staffing hours (hours by RNs, licensed 
practical nurses, and nurse aides). 
Efforts To Monitor and Reduce Rates of Hospitalization and 
Other Types of Transfers 
Rates of hospitalizations and other types of resident transfers have 
received increased attention from government agencies and key 
stakeholders because of the resident risk and high associated cost.  
 
30RTI [Research  Triangle Institute] International, MDS 3.0 Quality Measures Users 
Manual.  Accessed at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-
Assessment-Instruments/NursingHomeQualityInits/Downloads/MDS-30-QM-Users-
Manual-V60.pdf on February 19, 2013.   
31 CMS, Consumer Fact Sheet, December 2008. Accessed at 
http://www.cms.gov/Medicare/Provider-Enrollment-and-
Certification/CertificationandComplianc/Downloads/consumerfactsheet.pdf on   
October 4, 2013.   
 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)   5 
 
   
   
Congress, through the Affordable Care Act, established several initiatives 
designed to reduce hospital resident readmissions.32, 33 CMS publicly 
reports hospital readmission rates, has requested that Quality Improvement  
Organizations examine resident transfers, and is developing nursing home 
surveyor guidance related to the evaluation of hospitalizations of nursing 
home residents.34,  35, 36   The National Quality Forum (NQF) adopted 
measures of hospital performance based on hospital resident readmission 
rates.37  MedPAC made recommendations to CMS to limit payment 
policies that incentivize unnecessary hospitalizations of nursing home  
residents.38  Researchers have suggested changes to Medicare payment 
policies that can reduce hospitalization rates for the benefit of both the 
program and beneficiaries.39, 40  The provider community has also focused 
attention on developing best practices to reduce hospitalizations of nursing 
home residents.41    
METHODOLOGY 
To determine the percentage of Medicare residents transferred to hospitals 
for acute inpatient stays in FY 2011, we collected nursing home resident 
assessment data from the MDS, beneficiary information from the 
Enrollment Database (EDB), and hospital claims data from the National 
Claims History (NCH).  We combined these data sources to identify all 
transfers of Medicare nursing home residents to hospitals for inpatient 
stays. For this report, we defined a Medicare nursing home resident as 
any Medicare beneficiary who stayed in a Medicare- or Medicaid-certified 
 
32 Patient Protection and Affordable Care Act  of 2010, P.L. 111-148  3025. 
 
33 CMS, Community-Based Care Transitions Program Fact Sheet. Accessed at 

http://innovations.cms.gov/Files/fact-sheet/Community-based-Care-Transitions-Program-
Fact-Sheet-.pdf on  February 5, 2013. 
 
34 CMS, Hospital Quality Initiatives:  Outcome Measures. Accessed at 

https://www.cms.gov/HospitalQualityInits/20_OutcomeMeasures.asp on January 12, 

2012.  
  
35 CMS, Medicare Quality Improvement Organization  9th Scope of  Work, p.  69.  
Accessed at 
http://www.cms.gov/QualityImprovementOrgs/Downloads/9thSOWBaseContract_C_08-
01-2008_2_.pdf  on September 13, 2011.  
36 CMS, 2012 Nursing  Home Action Plan, 2012, pp. 2526  and 3739. 
  
37 NQF, Candidate Hospital Care Additional Priorities:  2007 Performance Measure. 

Washington, DC, 2007. 

38 MedPAC, Report to the Congress:  Reforming the Delivery System, June 2008, p.  87. 
 
39 ASPE, Hospitalizations of Nursing  Home Residents:  Background and  Options, 

June 2011, pp. 1523. 

40 CRS, Medicare Hospital Readmissions:  Issues, Policy Options and PPACA, 

September   21, 2010, pp. 1836.   
 
41 National Transitions  of Care Coalition,  2011. Accessed at http://www.ntocc.org/ on 
 
September 13,  2011. 
 
 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)   6 
 
   
   
nursing home for at least 1 day in FY 2011.  We defined a hospitalization 
as an instance when a Medicare nursing home resident went to a hospital 
for a Medicare-reimbursed inpatient stay within 1 day of discharge from a 
nursing home. 
Identifying Hospitalizations of Medicare Nursing Home 
Residents 
We identified hospitalizations of Medicare nursing home residents using 
data from the MDS, the EDB, and the NCH.  To identify all Medicare 
beneficiaries who were nursing home residents in FY 2011, we used the 
MDS and the EDB. The MDS contains resident Social Security Numbers 
(SSN), admission and discharge dates, and the related nursing home  
identification numbers.  We matched SSNs in the MDS to those in the 
EDB to identify Medicare beneficiaries and their associated Medicare 
Health Insurance Claim Numbers.  We excluded from this analysis the 
small number of beneficiaries in the MDS who had SSNs that did not 
match their SSNs as listed in the EDB.  We used the Medicare Part A  
claims data in the NCH to determine whether nursing home residents 
entered hospitals following their nursing home stays and to determine 
whether the nursing home stays were reimbursed through Medicare 
Part A.42    
The resulting data set enabled us to determine when beneficiaries were  
admitted to nursing homes, whether they were discharged from nursing 
homes, and whether they were hospitalized following discharge from  
nursing homes. 
Analysis  
Using the data set described above, we determined the percentage of 
Medicare nursing home residents hospitalized in FY 2011, the Medicare 
costs associated with hospitalizations of nursing home residents, the 
medical conditions associated with the hospitalizations, each nursing 
homes rate of resident hospitalization (which we refer to as the annual 
hospitalization rate), and the extent to which annual hospitalization rates 
varied according to select characteristics.  For analysis, we combined all 
Medicare nursing home residentsthose in Medicare-paid SNF stays and 
 
42 We  excluded nursing home  stays that occurred in  swing bed units within hospitals 
from our analysis.  (A swing-bed unit is a hospital unit in which residents receive skilled 
nursing services.)  We excluded these stays because the associated facilities differ 
substantially from the freestanding nursing  homes that are the focus of this report.  
Excluding these stays removed  111,298 stays and  1,149 hospital swing-bed  facilities 
from our analysis.  CMS,  Swing Bed Services, January 2013.  Accessed at 
http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-
MLN/MLNProducts/downloads/SwingBedFactsheet.pdf on March 18, 2013.   
 
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those in nursing home stays not paid by Medicareand refer to them as 
Medicare nursing home residents or nursing home residents. 
Calculating the Percentage of Hospitalized Nursing Home Residents. To  
calculate the percentage of nursing home residents hospitalized, we 
divided the total number of Medicare nursing home residents hospitalized 
at least once in FY 2011 by the total number of residents who had nursing 
home stays of at least 1 day in FY 2011.   
Calculating the Medicare Costs Associated With Resident 
Hospitalizations. We calculated the amount Medicare spent on 
hospitalizations of nursing home  residents by summing the Medicare 
reimbursements for each hospital stay that we identified as a 
hospitalization of a Medicare nursing home resident.  These costs 
represent only the amounts that Medicare paid hospitals for the residents 
acute-care hospital stays.  Our analysis included payments made to IPPS 
and non-IPPS hospitals. When hospitalized residents were transferred 
from their initial hospitals to other hospitals, we combined the  
reimbursements paid by Medicare to each hospital.43    
We calculated the amount Medicare spent on all hospitalizations of  
Medicare beneficiaries by summing Part  A reimbursements for all hospital 
stays with admission dates in FY 2011.   
Identification of Medical Conditions Associated With Hospitalization. To  
identify the medical conditions associated with hospitalizations of nursing 
home residents, we reviewed the primary ICD-9-CM diagnosis codes on 
the Medicare claims submitted for the hospital stays.  To categorize the 
diagnosis codes, we used the clinical classification system (CCS) of the 
Agency for Healthcare Research and Qualitys (AHRQ) Healthcare Cost 
and Utilization Project (HCUP). The CCS enables researchers to collapse 
ICD-9-CM codes into clinically meaningful categories for analysis and 
comparison between studies.  44    
Calculating Annual Hospitalization Rates for Nursing Homes. To  
calculate the annual hospitalization rate for each nursing home in 
FY 2011, we divided the number of nursing home stays that ended in 
hospitalization in a given home by the total number of nursing home stays 
 
43 Under CMSs transfer policy, CMS reduces reimbursements for hospitalizations under 
several scenarios, including instances when  residents are transferred to  other hospitals  
covered by the IPPS.  CMS,  Acute Care Hospital Inpatient  Prospective Payment System, 
February 2012.  Accessed at http://www.cms.gov/Outreach-and-Education/Medicare-
Learning-Network-MLN/MLNProducts/downloads/AcutePaymtSysfctsht.pdf on  
March 18, 2013.  
44 See Appendix B for a detailed description of the methodology  we used to describe the 
ICD-9-CM codes on the hospital claims using the HCUP CCS.   
 
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of at least 1 day in the home.  We  calculated annual hospitalization rates 
only for homes that provided care to 30 or more Medicare residents in 
FY 2011.    
Analysis of Characteristics Associated With Variation in Annual 
Hospitalization Rates. To determine whether annual hospitalization rates 
varied according to select nursing characteristics, we divided homes into 
subgroups based on characteristics and then calculated average annual 
hospitalization rates for the subgroups.  To determine how much annual 
hospitalization rates varied by geographic location, we divided homes into 
groups by the State code in their billing addresses and then calculated the 
average annual hospitalization rate for nursing homes in each State and the 
District of Columbia.  To determine how much annual hospitalization rates 
varied by scores on the four CMS Five-Star Quality Rating System  
metrics, we divided nursing homes into two groupsone group consisting 
of those with one, two, or three stars and the other consisting of those with 
four or five starsfor each metric and calculated the rates for each group.  
To determine how much annual hospitalization rates varied by nursing 
home size, we divided nursing homes into three categories based on the 
number of beds within each home and then calculated the rate for each 
group. To determine how much annual hospitalization rates varied by 
ownership type, we divided nursing homes into three groups based on 
ownership type and then calculated the rate for each group.   
We collected information on nursing homes locations, bed counts, and 
ownership categories from CMSs Certification and Survey Provider 
Enhanced Reports (CASPER) database.  CMS provided five-star ratings 
data applicable to our observation period.  
Limitations. The annual hospitalization rates are not adjusted to account 
for case mixin this instance, the physical and mental health of 
residents in a given nursing homeor other factors.  Additionally, the cost 
figures associated with the hospitalizations of nursing home residents do 
not include copayments for the hospital stays, physician reimbursements 
for the hospital stays, or payments made by the Medicare program or other 
payers for post-hospitalization services (e.g., followup physician office 
visits). Therefore, we likely underestimate the costs associated with 
hospitalizations of nursing home residents to the Medicare program and 
beneficiaries. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General 
on Integrity and Efficiency.   
 
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FINDINGS 
One-quarter of Medicare nursing home residents 
experienced hospitalizations in FY 2011, and Medicare 
spent $14.3 billion on these hospitalizations 
Of the 3.3 million Medicare residents who stayed in nursing homes for at 
least 1 day in FY 2011, 825,765 (24.8 percent) experienced 
hospitalizations. The majority of hospitalized residents (67.8 percent) 
transferred from nursing homes to hospitals only once.  Twenty percent 
transferred two times, 7.2 percent transferred three times, and the 
remaining 5 percent transferred four or more times (see Figure 1). 
Figure 1: Number of Hospitalizations Experienced by Hospitalized 
Medicare Residents Who Resided in Nursing Homes in FY 2011  
Two  
hospitalizations 
20.0% 
One   Three  
hospitalization  hospitalizations 
67.8%  7.2% 
Four  or  more  
hospitalizations 
5.0% 
 
  Source:  OIG analysis of data on FY  2011 hospitalizations of nursing home residents.  
 
Medicare spent $14.3 billion in FY 2011 on hospital stays for 
nursing home residents, spending 33 percent more per stay 
than for the average Medicare hospitalization 
Medicare spent $14.3 billion on 1.3 million hospital stays associated with  
hospitalizations of nursing home residents.  These costs represent 
11.4 percent of Medicare Part A spending on all hospital admissions 
($126 billion) in the same year.45  Medicare spent an average of 
$11,255 on each hospitalization of a nursing home resident, which was 
33.2 percent above the average cost ($8,447) of hospitalizations for all 
Medicare residents.    
 
45
 Cost estimates presented in this report are based  only on reimbursements paid by  
Medicare Part A for the initial hospitalizations.  They do  not include any other costs paid  
by Medicare or by  other payers for further medical caresuch as physician office visits  
or additional nursing home staysneeded as a result of the hospitalizations.     
 
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Nursing home residents went to hospitals most 
commonly for septicemia, pneumonia, and congestive 
heart failure 
Medicare nursing home residents went to hospitals for a wide range of 
conditions236 of the possible 285 primary diagnosis categories 
described in the HCUP CCS.  The primary diagnosis describes the most 
significant medical condition found during an inpatient admission.46   The 
15 most frequent CCS diagnosis categories accounted for 60.9 percent of 
all resident hospitalizations (see Table 1).   
Table 1: Primary Diagnoses on Claims of All Hospitalized Medicare 
Nursing Home Residents in FY 2011  
Percentage of  
CCS Primary Diagnosis Category  
Hospitalizations  
Fifteen Most Frequent CCS Categories   60.9%  
Septicemia  13.4%  
Pneumonia   7.0%  
Congestive heart failure, nonhypertensive  5.8%  
Urinary tract infections   5.3%  
Aspiration pneumonitis, food/vomitus   4.0%  
Acute renal failure  3.9%  
Complication of device, implant, or graft   3.3%  
Respiratory failure, insufficiency, or arrest  2.7%  
Gastrointestinal hemorrhage   2.4%  
Complications of surgical procedures or medical care  2.4%  
Chronic obstructive pulmonary  disease (COPD) and bronchiectasis   2.4%  
Delirium, dementia, and amnestic and other cognitive disorders  2.2%  
Acute cerebrovascular disease   2.1%  
Fluid and electrolyte disorders  2.0%  
Fracture of neck of femur (hip)   2.0%  
Remaining 221 CCS Categories on Nursing Home Claims   39.1%  
All CCS Diagnosis Categories  on Nursing Home Claims   100%  
Source:  OIG analysis of data on FY 2011 hospitalizations of nursing home residents.  
Hospitalizations for septicemia accounted for 21 percent of 
Medicare spending on nursing home resident hospitalizations 
Septicemia led to the most hospitalizations among all CCS categories 
(13.4 percent).  Septicemia and sepsis (a related condition) are serious 
bloodstream infections that can rapidly become life threatening.47    
 
46 CMS, Medicare Claims Processing Manual, Chapter  23, Fee Schedule  
Administration and Coding Requirements. 
47 Centers for Disease Control and Prevention (CDC), Inpatient Care of  Septicemia  or 
Sepsis:  A Challenge for Patients and Hospitals, National Center for Health  Statistics 
Data Brief, 2011.   In the data brief, CDC  found that the rate of  nursing home resident  
hospitalizations for septicemia more than doubled  from 2000 to  2008 and that 
hospitalizations for septicemia ended in  death much more often than hospitalizations for 
all other conditions.    
 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)   11 
 
   
   
Medicare spent almost $3 billion on nursing home resident 
hospitalizations associated with septicemia, more than the next three most 
expensive conditions combined. The high total reimbursement amount for 
septicemia is the result of both its frequency as a primary diagnosis on 
hospital claims and its above-average reimbursement rate.  Table 2 shows 
the costs associated with the 15 most costly CCS diagnosis categories.   
Table 2: Medicare Costs Associated With Medicare Nursing Home 
Resident Hospitalizations in FY 2011 by Sum of Reimbursement  
Sum of  Percentage of   
Average 
CCS Primary Diagnosis Category   All Hospital  All Hospital 
Reimbursement  
Reimbursements   Reimbursements  
Fifteen Most Costly CCS Categories   $9,268,066,011  65.2%   $11,554 
Septicemia  $2,963,329,522  20.8%   $17,430 
Pneumonia  $844,817,051  5.9%   $9,464 
Congestive heart failure, 
$643,386,174  4.5%   $8,731 
nonhypertensive 
Respiratory failure, insufficiency,   
$637,201,272  4.5%   $18,438 
or arrest  
Complication of device, implant, or 
$619,241,745  4.3%   $14,629 
graft  
Aspiration pneumonitis, 
$618,310,799  4.3%   $12,223 
food/vomitus 
Complications of surgical 
$449,236,625  3.2%   $14,731 
procedures or medical care  
Acute renal failure  $425,965,874  3.0%   $8,679 
Urinary tract infections  $422,251,024  3.0%   $6,296 
Delirium, dementia, and amnestic 
$321,003,626  2.3%   $11,515 
and other cognitive disorders 
Fracture of neck of femur (hip)   $311,417,099   2.2%   $12,578  
Acute cerebrovascular disease   $285,667,898   2.0%   $10,847  
Gastrointestinal hemorrhage   $264,867,028   1.9%   $8,544  
COPD and bronchiectasis  $238,845,320   1.7%   $7,727  
Acute myocardial infarction   $222,524,954   1.6%   $11,475  
Remaining 221 CCS Categories    $4,991,830,494  34.4%   $11,188 
All CCS Diagnosis Categories  on 
$14,259,896,509  100%   $11,211  
Nursing Home Claims  
Source:  OIG analysis of data on FY 2011 hospitalizations of nursing home residents.  
 
   
 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)   12 
 
   
   
Nursing homes annual rate of resident hospitalization 
varied according to select characteristics, including 
geographic location and rating on CMSs Five-Star 
Quality Rating System 
Nursing homes individual annual hospitalization rates varied widely, 
ranging from less than 1 percent to 69.7 percent.  The annual 
hospitalization rate averaged 25 percent.  Additionally, 1,059 nursing 
homes (7 percent) had annual hospitalization rates greater than 40 percent.  
Table 5 shows the distribution of annual hospitalization rates among 
Medicare- and Medicaid-certified nursing homes.   
Table 5: Percentages of  Nursing Homes by Annual Hospitalization Rate in 
FY 2011  
Percentage of  
Annual Hospitalization  Rate  
Homes 
Above 50 percent    0.6%  
40 percent to 49.9 percent   6.2%  
30 percent to 39.9 percent   22.1%  
20 percent to 29.9 percent   39.9%  
10 percent to 19.9 percent   26.9%  
Less than 9.9 percent  4.3%  
All Homes   100.0%  
Source:  OIG analysis of data on FY 2011 hospitalizations of nursing home residents.  
Nursing homes annual hospitalization rates varied by the four 
characteristics that we examined:  the nursing homes geographic location, 
its size, its rating on CMS Five-Star Quality Rating System, and the 
category of its ownership.48   
Homes with high annual hospitalization rates were not evenly 
distributed across the country 
Nursing homes in Arkansas, Louisiana, Mississippi, and Oklahoma had 
the highest annual hospitalization rates when averaged at the State level.  
The average hospitalization rate for nursing homes in Louisiana 
(38.3 percent) was 14 percentage points higher than the national average 
(24.3 percent). Generally, nursing homes in States in the upper Pacific 
West, Mountain West, upper North Central Midwest, and New England 
 
48 The extent of identified  variations suggests that average annual rates of hospitalization  
differed by the reviewed characteristics, but  we do not try to explain these variations.   
Other factorssuch as State bed hold policieshave been shown to influence  
hospitalization rates.  D.C. Grabowski, Medicaid bed-hold  policy and Medicare skilled  
nursing facility  rehospitalizations, Health Services Research, 45, 6, 2010,                     
pp. 19631980.  
 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)   13 
 
   
   
regions had the lowest average annual hospitalization rates (see 
Figure 2).49  
Figure 2: Geographic Distribution of Average Annual Hospitalization Rate in 
FY 2011  
 
 
Source:  OIG analysis of data on FY 2011 hospitalizations of nursing home residents. 
In general, nursing homes rated one, two, or three stars on the  
Nursing Home Compare Five-Star Quality Rating System had 
higher annual hospitalization rates than those rated as four or 
five stars 
Nursing homes rated one, two, or three stars (the lowest five-star ratings) 
on three of the four metrics (the overall, survey, and staffing metrics) had 
higher annual hospitalization rates than those rated four or five stars (the 
highest five-star ratings). The biggest difference between annual 
hospitalization rates appears in the staffing metric, where nursing homes 
rated one, two, or three stars had hospitalization rates that were 
5 percentage points higher than that of those rated four or five stars.  The 
exception is the quality metric, where nursing homes rated one, two, or 
three stars had the same hospitalization rate as those rated four or five 
stars (see Figure 3).    
 
 
 
49 Appendix C lists the average annual hospitalization rates for nursing  homes in all 
States.  Regions are defined by the Census Bureau.  
 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)   14 
 
   
   
 
                        Figure 3: Annual Hospitalization Rate by Five-Star Rating in FY 2011  
30%  26.7%  26.1%  27.3%  25.1%25.1% 
22.8%  23.0%  22.3% 
20% 
10% 
0% 
Overall Metric  Survey Metric  Staffing Metric  Quality Metric 
Nursing homes rated  one, two, or  three stars 
Nursing homes rated  four or  five stars 
   
                     Source:  OIG analysis of data on FY 2011 hospitalizations of nursing home residents. 
Large and medium-sized nursing homes had higher annual 
hospitalization rates than small nursing homes 
Small nursing homes had annual hospitalization rates 2.4 percentage 
points lower than the national average.  Large and medium-sized nursing 
homes had annual hospitalization rates 1.6 and 0.9 percentage points 
higher than the national average, respectively (see Table 6).  
Table 6: Annual Hospitalization Rate by Nursing Home Size in FY 2011  
Percentage 
Average Annual  
  Number  Point Difference  
Size of Home   Hospitalization 
of Homes   From 
Rate  
National Rate 
  Nationwide   15,497*   25.0%   n/a 
   Large nursing homes (more than  
4,749  26.6%   1.6%  
120 beds)  
   Medium-sized nursing homes 
5,539 25.9%   0.9%  
(80120 beds)  
   Small nursing homes (fewer than 
5,209 22.6%   -2.4%  
80 beds)  
Source:  OIG analysis of data on FY 2011 hospitalizations of nursing home residents. 

*CASPER did not contain bed count information for one home.
 
As a group, for-profit nursing homes had the highest annual 
hospitalization rate compared to the rate for 
government-owned and nonprofit nursing homes  
As shown in Table 7, for-profit homes had an annual hospitalization rate 
1.5 percentage points higher than the national average.  
Government-owned and nonprofit homes had annual hospitalization rates 
about 1.5 and 3.8 percentage points lower than the national average, 
respectively.    
 
 
 
 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)   15
 
   
   
Table 7: Average Annual Hospitalization Rate by  Ownership Category in 
FY 2011  
Percentage 
Percentage 
Average  Point 
of Medicare 
Number  Annual   Difference 
Ownership Category   Population 
of Homes   Hospitalization  From 
Served  
Rate   National 
Annually  
Rate  
Nationwide  15,497*   109.0%**   25.0%   n/a 
   For-profit nursing homes  10,761  76.4%   26.5%   1.5%  
  Government-owned public 
850  4.8%   23.5%   -1.5%  
nursing homes  
   Nonprofit nursing homes  3,886 27.8%   21.2%   -3.8%  
Source:  OIG analysis of data on FY 2011 hospitalizations of nursing home residents. 

*CASPER did not contain ownership information for one home. 

**Percentage exceeds 100 percent because some  residents received care in multiple nursing homes. 

 
   
 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)   16 
 
   
   
CONCLUSION AND RECOMMENDATIONS 
We found that nursing homes hospitalized one-quarter of nursing home 
residents in FY 2011, that these hospitalizations cost Medicare             
$14.3 billion, and that a small number of medical conditions                        
(e.g., septicemia) accounted for the majority of hospitalizations and 
costs. We also identified wide variation in rates of hospitalization among 
individual nursing homes.  Among 1,059 nursing homes, more than 
40 percent of stays ended in hospitalization.  Nursing homes in certain 
States (Arkansas, Louisiana, Mississippi, and Oklahoma) and nursing 
homes rated as one, two, or three stars on CMSs Five-Star Quality Rating 
System had the highest average annual hospitalization rates.    
Hospitalizations of nursing home residents are necessary when physicians 
and nursing staff determine that residents require acute-level care.  
However, the higher-than-average resident hospitalization rates of some  
nursing homes in FY 2011 suggest that some hospitalizations could have 
been avoided through better nursing home care.   
We recommend that CMS: 
Develop a QM That Describes Nursing Home Rates of Resident 
Hospitalization 
CMS should develop a QM of nursing home rates of resident 
hospitalization and consider publicly reporting this measure on the 
Nursing Home Compare Web site.  One possible QM could be a measure 
of each homes overall hospitalization rate.  Alternatively, CMS could 
develop more discrete measures that would identify nursing homes that 
hospitalize residents more frequently than other homes for certain 
conditions. Adding a measure of hospitalization rates to the existing QMs 
not only would enable nursing homes and the public to compare these 
rates across nursing homes, but also would provide greater incentive for 
nursing homes to reduce avoidable hospitalizations.    
Instruct State Agency Surveyors To Review Nursing Home 
Rates of Resident Hospitalization as Part of the Survey and 
Certification Process 
After developing the QM recommended above, CMS should instruct State 
survey agencies to use the QM in preparing to survey homes and provide 
the agencies with guidance for interpreting and using the QM.  Examining 
these data could help surveyors identify areas of concernsuch as 
infection control practices in homes with high rates of hospitalizations for 
septicemiawithin individual nursing homes. 
   
 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)   17 
 
   
   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
In its comments on the draft report, CMS concurred with both of our 
recommendations.   
CMS concurred with the recommendation to develop a QM that describes 
nursing home rates of resident hospitalization.  CMS stated that it is taking 
steps to develop and implement a nursing home hospitalization QM in 
accordance with the rulemaking process.  Further, CMS indicated that it is 
developing a skilled nursing facility readmission measure, which it intends 
to submit to the National Quality Forum for endorsement in late 2013.    
CMS also concurred with the recommendation to instruct State survey 
agency surveyors to review rates of hospitalization for nursing home  
residents as part of the survey and certification process.  CMS indicated 
that surveyors should consider measures of hospitalization during their 
nursing home reviews. CMS stated that reducing hospitalizations is a 
major public health goal and that hospitalization measures can be used to 
assess the quality of care that nursing home residents receive.   
For the full text of the CMSs comments, see Appendix D.  We made 
minor changes to the report based on technical comments. 
   
 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)   18 
 
   
   
APPENDIX A 
Nursing Home Quality Measures 
Nursing homes routinely collect resident assessment data at specific 
intervals during a nursing home stay, and CMS stores the assessment 
results in the MDS. CMS converts MDS data into the 18 QMs described 
in Table A-1.  50    
 
Table A-1: Nursing Home Quality Measures  
Short Stay  Quality Measures  
1.  Percent of Residents Who Self-Report Moderate to Severe Pain  
2.  Percent of Residents With Pressure Ulcers That Are New or Worsened  
3.  Percent of Residents Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine  
4.  Percent of Residents Who Were Assessed and Appropriately Given the Pneumococcal Vaccine  
5.  Percent of Short-Stay Residents Who Newly  Received Antipsychotic Medications 
Long-Stay Quality  Measures  
6.  Percent of Residents Experiencing One or More Falls With Major Injury   
7.  Percent of Residents Who Self-Report Moderate to Severe Pain  
8.  Percent of High-Risk Residents With Pressure Ulcers  
9.  Percent of Residents Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine  
10. Percent of Residents Who Were Assessed and Appropriately Given the Pneumococcal Vaccine  
11. Percent of Residents With Urinary Tract Infections  
12. Percent of Low-Risk Residents Who Lose Control of Their Bowels or Bladder  
13. Percent of Residents Who Have/Had Catheters Inserted and Left in Their Bladders 
14. Percent of Residents Who Were Physically Restrained  
15. Percent of Residents Whose Need for Help With Activities of Daily  Living Has Increased  
16. Percent of Residents Who Lose Too Much Weight  
17. Percent of Residents Who Have Depressive Symptoms  
18. Percent of Long-Stay Residents Who Received Antipsychotic Medications 
Source: CMS, MDS 3.0 QM  Users Manual V8.0.  
 
 
 
50
 CMS, Nursing Home Quality Initiative:  Quality Measures. Accessed at 
http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-
Instruments/NursingHomeQualityInits/NHQIQualityMeasures.html on  April 16, 2013. 
 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)   19
 
   
   
APPENDIX B 
Detailed Methodology for Categorizing the Primary Diagnosis 
Codes on Hospital Claims 
To describe the ICD-9-CM codes on the hospitalized residents inpatient 
claims, we used the CCS established by AHRQs HCUP.51   The HCUP  
CCS enables researchers to identify patterns of diagnosis and procedure 
codes. Researchers use the CCS to collapse the ICD-9-CM systems  
14,000 diagnosis codes and 3,900 procedure codes into a smaller number 
of clinically meaningful categories for presentation and analysis.  AHRQ 
used the CCS in its 2012 review of data on hospitalizations of nursing 
home residents.52  
For this review, we used the CCS single-level categorization.  The 
single-level categorization system is designed for ranking diagnoses and 
procedures. We matched the primary diagnosis codes on the hospital 
claims associated with the hospitalizations to the appropriate CCS 
single-level category.  See Table B-1 for an example of how the CCS 
collapses individual ICD-9-CM codes into clinically meaningful groups.  
Table B-1: Examples of Single-Level CCS Matching 
General 
ICD-9-CM Diagnosis   CCS 
Description of 
Codes Used    Category  
Condition 
0031  0202  0223   0362  0380  0381  03810 03811 03812 
Septicemia  03819 0382  0383   03840 03841 03842 03843 03844 03849  2 
0388  0389  0545   449    77181 7907  
00322 0203  0204   0205  0212  0221  0310   0391   0521 
0551  0730  0830   1124  1140  1144  1145   11505 11515 
11595 1304  1363   4800  4801  4802  4803   4808   4809 
Pneumonia   481    4820  4821   4822  4823   48230 48231 48232 48239  122 
4824  48240 48241 48242 48249 4828   48281 48282 48283 
48284 48289 4829   483    4830  4831  4838   4841   4843 
4845  4846  4847   4848  485    486    5130  5171   
Congestive heart  
39891 4280  4281   42820 42821 42822 42823 42830 42831 
failure,  108 
42832 42833 42840 42841 42842 42843 4289  
nonhypertensive 
Source:  HCUP, Clinical Classifications Software (CCS) 2013 User Guide. 
 
51 A. Elixhauser, C. Steiner, and L. Palmer, Clinical Classifications Software (CCS), 
AHRQ, 2013.  Accessed at http://www.hcup-us.ahrq.gov/toolssoftware/ccs/ccs.jsp on  
February 5,  2013.  
52 AHRQ, Transitions  between  Nursing  Homes and Hospitals in the Elderly Population,  
2009, September 2012.  Accessed at  http://www.hcup-
us.ahrq.gov/reports/statbriefs/sb141.pdf on February  5, 2013.  
 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)   20 
 
   
   
APPENDIX C 
Average Annual Rate of Hospitalization of Nursing Home 
Residents by State 
Table C-1 reports the average annual rates of resident hospitalization in 
FY 2011 for nursing homes in all States.  We did not include in this 
analysis homes with fewer than 30 admissions in FY 2011 or facilities 
designated as swing bed providers. 
 
Table C-1: Average Annual Hospitalization Rates by State in FY 2011  
State   Rate   State   Rate   State   Rate  
Louisiana  38.3%   Maryland   25.3%   Nevada   20.9%  
Mississippi   35.7%   Indiana  24.9%   New Mexico  19.5%  
Arkansas  31.7%   Florida   24.9%   Wyoming  19.1%  
Oklahoma   31.6%   Michigan  24.8%   New Hampshire   19.0%  
Kentucky    29.2%   Virginia   24.8%   Washington  18.6%  
Illinois   29.0%   Connecticut  24.7%   Wisconsin  18.3%  
Tennessee   28.4%   California  24.2%   Vermont   17.9%  
New Jersey    28.2%   North Carolina   24.2%   Colorado   17.8%  
Texas    28.2%   Delaware  24.2%   Maine  17.2%  
Missouri  27.9%   Pennsylvania  23.4%   Montana  17.0%  
Kansas  27.5%   South Dakota   23.4%   Alaska  16.9%  
New York   27.4%   Ohio    23.0%   Arizona  16.7%  
Alabama  26.9%   Iowa   22.9%   Minnesota  16.0%  
West Virginia   26.5%   Nebraska   22.7%   Idaho   15.9%  
District Of Columbia   26.5%   Massachusetts  22.5%   Oregon   14.9%  
Georgia   26.3%   Rhode Island   21.6%   Utah   14.2%  
South Carolina   25.3%   North Dakota   21.4%   Hawaii  10.6%  
Source:  Office of  Inspector General analysis of data on FY 2011 hospitalizations of nursing home residents.  
 
 
 
 
 
 
 
 
   
 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)   21 
 
  APPENDIX D 
Agency Comments 
'f-	
t 
/,P.VIt<s....
DEPARTMENT OF HEALTH & HUMAN SERVICllS  Centers for Medicare & Medicaid Services 
,~~ 
Administrator 
Washington, DC 20201 
DATE: 	 SEP 19 2013 
TO: 	 Daniel R. Levinson 

Inspector General 

FROM: 	 Marilya "l:aveilner 

Administralor 

SUBJECT: 	 Office oflnspector Geneml (OIG) Draft Report: Medicare Nursing Home Resident 
Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040) 
The Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to review and 
comment on the above subject OIG draft report. Nursing home quality measurement and oversight is of 
critical importance to us, including addressing unnecessary hospital admissions and readmissions. One 
example, focusing on dual eligible beneficiaries, is the CMS Initiative to Reduce Avoidable 
Hospitalizations among Nursing Facility Residents. In this initiative, which was launched in 2012, 
CMS selected organizations to partner with nursing facilities and deploy interventions aimed at 
reducing avoidable hospitalizations, improving transitions and outcomes, and reducing costs among 
Medicare-Medicaid enrollees. Lessons learned from this initiative wiii help inform future policy 
decisions. 1 
In addition, the Fiscal Year (FY) 2014 President's Budget includes a proposal addressing high rates 
ofhospital readmissions in skilled nursing facilities (SNFs). Currently, there is a Hospital 
Readmission Reduction program that reduces payments for hospitals with high rates of readmission, 
many ofwhich could have been avoided with better care. To promote similar high-quality care in 
SNFs, the President' s Budget proposal would reduce payments by up to three percent for SNFs with 
high rates ofcare-sensitive, preventable hospital readmissions . 
The purpose of this OIG study was to (I) Determine the proportion of Medicare nursing home 
residents hospitalized in FY 2011 and the associated costs to Medicare; (2) IdentifY the medical 
conditions most commonly associated with these hospitalizations; (3) Describe the extent to which 
these hospitalization rates varied across nursing homes; and (4) Describe the extent to which these 
hospitalization rates varied according to select nursing home characteristics. 
The OIG recommendations and CMS's responses to those recommendations are discussed below. 
OIG Recommendation 
The OIG recommends that CMS develop a quality measure that describes hospitalization mtes for 
residents of nursing homes. 
1 Additional information on this initiative is available at htto://jnnovation.cms.gov/initiali\:es/rahnjj: 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)  22   
   
 
 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)   23 
 
   
   
 
ACKNOWLEDGMENTS 
This report was prepared under the direction of Kevin K. Golladay,  
Regional Inspector General for Evaluation and Inspections in the Dallas 
regional office; Blaine Collins, Deputy Regional Inspector General; and 
Ruth Ann Dorrill, Deputy Regional Inspector General.   
Jeremy Moore served as the team leader for this study.  Other principal 
Office of Evaluation and Inspections staff from the Dallas regional office 
who contributed to the report include Maria Balderas, Nathan Dong, and 
Chetra Yean.  Central office staff who provided support include 
Kevin Farber, Heather Barton, Sandy Khoury, Starr Kidda, and Christine 
Moritz.  
 
 
 
 
 
 
Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040)   24 
 
   
   
Office of Inspector General
http://oig.hhs.gov  
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as  
amended, is  to protect the integrity of the Department of  Health and Human Services  
(HHS)  programs, as well as the health and welfare of beneficiaries  served by those 
programs.  This statutory mission  is  carried  out through  a nationwide network  of  audits, 
investigations, and inspections conducted by the  following operating components: 
Office of Audit Services 
The Office  of  Audit Services  (OAS) provides auditing services  for HHS, either by  conducting  
audits  with its own audit resources or by  overseeing  audit work done by others.  Audits  
examine the performance of HHS programs and/or its grantees and contractors in carrying  
out their respective responsibilities and are intended  to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and  
mismanagement and promote economy and efficiency  throughout  HHS. 
Office of Evaluation and Inspections 
The Office  of  Evaluation and Inspections (OEI)  conducts national evaluations to  provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud,  waste, or abuse  and promoting  
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations  
of  fraud and misconduct  related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI  utilizes its resources 
by actively  coordinating with the Department  of Justice  and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to  criminal 
convictions, administrative sanctions,  and/or  civil monetary  penalties.  
Office of Counsel to the Inspector General  
The Office of Counsel to the  Inspector  General (OCIG) provides general legal services to 
OIG, rendering  advice and opinions on HHS programs and operations and  providing all  
legal support for OIGs  internal operations.  OCIG represents  OIG in all civil and 
administrative fraud and abuse cases involving HHS programs,  including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In  connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program  guidance, publishes fraud alerts, and provides other  
guidance  to  the health care industry concerning the anti-kickback statute and other  OIG  
enforcement authorities.