Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

MEDICARE NURSING HOME 

RESIDENT HOSPITALIZATION 

RATES MERIT ADDITIONAL 

MONITORING 

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 hospitalizations—i.e., transfers to hospitals for inpatient stays—in fiscal year 

(FY) 2011. We included all Medicare nursing home residents—those 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 CMS’s 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. 154–155. 

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 ShortStay Medicare Nursing Home Residents,” Journal of the American Geriatrics Society, 

50, 2, 2002, pp. 223–224. 

6

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

http://www.cms.gov/Medicare/Provider-Enrollment-andCertification/CertificationandComplianc/Downloads/2012-Nursing-Home-ActionPlan.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. 6–7.
 8 Ibid., pp. 8–14. 

9

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

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

September 21, 2010, pp. 11–17. 

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/Regulationsand-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-CHIPProgram-Information/By-Topics/Delivery-Systems/Institutional-Care/Nursing-FacilitiesNF.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/ProviderEnrollment-andCertification/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-AssessmentInstruments/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-AssessmentInstruments/NursingHomeQualityInits/NHQIQualityMeasures.html on April 16, 2013. 

29 See Appendix A for a complete listing of the 18 QMs. 

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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 User’s 

Manual. Accessed at http://www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/NursingHomeQualityInits/Downloads/MDS-30-QM-UsersManual-V60.pdf on February 19, 2013. 31 CMS, Consumer Fact Sheet, December 2008. Accessed at 

http://www.cms.gov/Medicare/Provider-Enrollment-andCertification/CertificationandComplianc/Downloads/consumerfactsheet.pdf on 

October 4, 2013. 

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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-ProgramFact-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. 25–26 and 37–39. 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. 15–23. 

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

September 21, 2010, pp. 18–36. 

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 

home’s 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 residents—those 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-NetworkMLN/MLNProducts/downloads/SwingBedFactsheet.pdf on March 18, 2013. 

Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040) 7 
 

 

 

those in nursing home stays not paid by Medicare—and 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 Quality’s (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 CMS’s 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/MedicareLearning-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. 

Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040) 8 
 

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 groups—one group consisting 

of those with one, two, or three stars and the other consisting of those with 

four or five stars—for 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 CMS’s 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 mix”—in this instance, the physical and mental health of 

residents in a given nursing home—or 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 

One

hospitalization

67.8%

Two

hospitalizations

20.0%

Three

hospitalizations

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 care—such as physician office visits 

or additional nursing home stays—needed 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 

conditions—236 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 

CCS Primary Diagnosis Category Percentage of 

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 

CCS Primary Diagnosis Category 

Sum of 

All Hospital 

Reimbursements 

Percentage of 

All Hospital 

Reimbursements 

Average 

Reimbursement 

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, 

nonhypertensive $643,386,174 4.5% $8,731 

Respiratory failure, insufficiency, 

or arrest $637,201,272 4.5% $18,438 

Complication of device, implant, or 

graft $619,241,745 4.3% $14,629 

Aspiration pneumonitis, 

food/vomitus $618,310,799 4.3% $12,223 

Complications of surgical 

procedures or medical care $449,236,625 3.2% $14,731 

Acute renal failure $425,965,874 3.0% $8,679 

Urinary tract infections $422,251,024 3.0% $6,296 

Delirium, dementia, and amnestic 

and other cognitive disorders $321,003,626 2.3% $11,515 

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 

Nursing Home Claims $14,259,896,509 100% $11,211 

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 CMS’s 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 

Annual Hospitalization Rate Percentage of 

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 home’s 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 factors—such as State bed hold policies—have 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. 1963–1980. 

Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040) 13 
 

Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040) 14 

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. 
 

 

 

 

 

 

 Figure 3: Annual Hospitalization Rate by Five-Star Rating in FY 2011 

26.7% 26.1% 27.3% 25.1% 22.8% 23.0% 22.3% 25.1% 

0% 

10% 

20% 

30% 

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 

Size of Home Number 

of Homes 

Average Annual 

Hospitalization 

Rate 

Percentage 

Point Difference 

From 

National Rate

 Nationwide 15,497* 25.0% n/a 

 Large nursing homes (more than 

120 beds) 

 Medium-sized nursing homes 

(80–120 beds) 

 Small nursing homes (fewer than 

80 beds) 

4,749

5,539

5,209

 26.6% 

25.9% 

22.6% 

1.6% 

0.9% 

-2.4% 

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 

Ownership Category Number 

of Homes 

Percentage 

of Medicare 

Population 

Served 

Annually 

Average 

Annual 

Hospitalization 

Rate 

Percentage 

Point 

Difference 

From 

National 

Rate 

Nationwide 15,497* 109.0%** 25.0% n/a 

 For-profit nursing homes 

 Government-owned public 

nursing homes 

 Nonprofit nursing homes 

10,761

850 

3,886

 76.4% 

4.8% 

27.8% 

26.5% 

23.5% 

21.2% 

1.5% 

-1.5% 

-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 CMS’s 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 home’s 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 concern—such as 

infection control practices in homes with high rates of hospitalizations for 

septicemia—within 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 CMS’s 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 
 

Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040) 19

 

 

 

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 User’s Manual V8.0. 

50 CMS, Nursing Home Quality Initiative: Quality Measures. Accessed at 

http://www.cms.gov/Medicare/Quality-Initiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/NHQIQualityMeasures.html on April 16, 2013. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 AHRQ’s 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 system’s 

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 

Description of 

Condition 

ICD-9-CM Diagnosis 

Codes Used 

CCS 

Category 

Septicemia 

0031 0202 0223 0362 0380 0381 03810 03811 03812 

03819 0382 0383 03840 03841 03842 03843 03844 03849 

0388 0389 0545 449 77181 7907 

2 

Pneumonia 

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 

481 4820 4821 4822 4823 48230 48231 48232 48239 

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 

122 

Congestive heart 

failure, 

nonhypertensive 

39891 4280 4281 42820 42821 42822 42823 42830 42831 

42832 42833 42840 42841 42842 42843 4289 108 

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.hcupus.ahrq.gov/reports/statbriefs/sb141.pdf on February 5, 2013. 

Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040) 20 
 

Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring (OEI-06-11-00040) 21 

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% 

 

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. 

Source: Office of Inspector General analysis of data on FY 2011 hospitalizations of nursing home residents. 
APPENDIX D 

Agency Comments 

/,P.VIt<s.... t 'f-	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 

of hospital 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 of care-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 OIG’s 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.