GAO Report to Congressional Committees 

 November 2002 SKILLED NURSING 

FACILITIES 

Available Data Show 

Average Nursing Staff 

Time Changed Little 

after Medicare 

Payment Increase 

GAO-03-176 
Page i GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

Letter 1

Results in Brief 3 

Background 5 

SNF Staffing Changed Little after Payment Increase Took Effect 9 

Conclusions 15 

Matter for Congressional Consideration 15 

Agency Comments and Our Evaluation 15 

Appendix I Data Source and Data Verification Methods for 

Nurse Staffing Ratio Analysis 21 

Appendix II Average Change in Nursing Staff Time between 

2000 and 2001, Grouped by Category of SNF 29 

Appendix III Comments from the Centers for Medicare & 

Medicaid Services 30 

Appendix IV GAO Contacts and Staff Acknowledgments 31 

Related GAO Products 32 

Tables 

Table 1: Average SNF Staffing Time by Type of Nurse, 2000 and 

2001 11 

Table 2: Average Change in Nursing Time between 2000 and 2001 

for Freestanding SNFs, Grouped by Medicare Patient 

Share 12 

Table 3: Average Change in Nursing Time between 2000 and 2001 

for Freestanding SNFs, Grouped by Total Margin 13 

Table 4: Average Change in Nursing Time between 2000 and 2001 

for Freestanding SNFs, Grouped by 2000 Staffing Ratios 14 

Table 5: Creation of Our Sample of SNFs 24 

Contents 
Page ii GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

Table 6: Distribution of SNFs across States (in Percentages) 24 

Table 7: Exclusions from the Sample 27 

Abbreviations 

AAHSA American Association of Homes and Services for the Aging 

AHCA American Health Care Association 

AHA American Hospital Association 

BBA Balanced Budget Act of 1997 

BLS Bureau of Labor Statistics 

BBRA Medicare, Medicaid, and SCHIP Balanced Budget 

 Refinement Act of 1999 

BIPA Medicare, Medicaid, and SCHIP Benefits 

 Improvement and Protection Act of 2000 

CMS Centers for Medicare & Medicaid Services 

CNA certified nurse aide 

FTE full-time equivalent 

HCFA Health Care Financing Administration 

LPN licensed practical nurse 

LVN licensed vocational nurse 

OSCAR Online Survey Certification and Reporting System 

PPS prospective payment system 

RN registered nurse 

RUG resource utilization group 

SNF skilled nursing facility 
Page 1 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

November 13, 2002 

The Honorable Max Baucus 

Chairman 

The Honorable Charles E. Grassley 

Ranking Minority Member 

Committee on Finance 

United States Senate 

The Honorable William M. Thomas 

Chairman 

The Honorable Charles B. Rangel 

Ranking Minority Member 

Committee on Ways and Means 

House of Representatives 

The nation’s 15,000 skilled nursing facilities (SNF) play an essential role in 

our health care system, providing Medicare-covered skilled nursing and 

rehabilitative care each year for 1.4 million Medicare patients who have 

recently been discharged from acute care hospitals. In recent years, many 

analysts and other observers, including members of the Congress, have 

expressed concern about the level of nursing staff in SNFs and the impact 

of inadequate staffing on the quality of care. In 2000, the Congress 

responded to these concerns with a temporary increase in Medicare 

payment intended to encourage SNFs to increase their nursing staff. 

Medicare pays SNFs through a prospective payment system (PPS) in 

which they receive a fixed amount for each day that a patient receives 

care. This daily payment rate varies according to a patient’s expected 

needs for care, and is the sum of nursing, therapy, and routine cost 

components.1

 The Congress, through the Medicare, Medicaid, and SCHIP 

Benefits Improvement and Protection Act of 2000 (BIPA),2

 increased the 

nursing component of the PPS SNF rate by 16.66 percent, effective April 1, 

2001. This raised the overall SNF payment rates by 4 to 12 percent, 

 1

The nursing component includes costs related not only to nursing but to medical social 

services and nontherapy ancillary services, such as drugs, laboratory tests, and imaging. 

The therapy component includes costs related to occupational, physical, and speech 

therapy. The routine cost component includes costs for capital, maintenance, and food. 

2

Pub. L. No. 106-554, App. F, § 312(a), 114 Stat. 2763, 2763A-498. 

United States General Accounting Office

Washington, DC 20548 
Page 2 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

depending on the patient’s expected care needs. However, the law did not 

require facilities to spend this additional money on nursing staff. This was 

not the only recent legislative change to SNF payments. A year earlier, 

payment rates for certain types of patients had been increased by 20 

percent, and for fiscal years 2001 and 2002, overall rates were boosted by 4 

percent.3

 The nursing component increase expired on October 1, 2002, and 

the Congress is considering whether to reinstate it. 

BIPA directed us to assess the impact of the increase in the nursing 

component on SNF nurse staffing ratios. The law also required that we 

recommend whether the increased payments should continue.4

Specifically, this report examines whether nurse staffing ratios5

—overall 

and for categories of SNFs, such as for-profit and not-for-profit facilities—

rose after April 1, 2001, when the payment increase took effect. 

To address this issue, we used data from the Online Survey Certification 

and Reporting System (OSCAR),6

 maintained by the Centers for Medicare 

& Medicaid Services (CMS),7

 to assess nurse staffing ratios. We examined 

all SNFs that at the time of our analysis had OSCAR data on staffing levels 

available both before and after the payment increase. There were slightly 

over 6,500 SNFs—over one-third of all SNFs—for which these data were 

available. We tested for differences between these 6,500 and the 13,454 

SNFs that were surveyed in calendar year 2000. We found no statistically 

significant differences in terms of type of facility, size, ownership, and the 

share of SNF patients paid for by Medicare. However, we found 

statistically significant differences between these two groups of SNFs in 

terms of the distribution by state. (See app. I, table 6.) To improve the 

 3

Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999, Pub. L. No. 106-

113, App. F, § 101, 113 Stat. 1501, 1501A-324. 

4

BIPA § 312(b). 

5

A nurse staffing ratio is defined as nursing hours per patient per day. Nursing staff include 

registered nurses, licensed practical nurses, and aides. In this report, “staffing” refers to 

these nursing staff. 

6

OSCAR stores data collected during annual inspections or surveys of SNFs conducted by 

state agencies under contract to CMS. OSCAR is the only uniform data source that contains 

data on both patients and nursing staff. 

7

CMS administers the Medicare program. On July 1, 2001, the Secretary of Health and 

Human Services changed the name of the Health Care Financing Administration (HCFA) to 

CMS. In this report, we will continue to refer to HCFA where our findings apply to the 

organizational structure and operations associated with that name. 
Page 3 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

accuracy of the OSCAR data, we identified over 500 SNFs in our sample 

that had apparent data entry or other data reporting errors,8

 compared 

those data to source documents, and made corrections where appropriate. 

For 179 of these cases, we contacted facilities to resolve data issues. These 

verification and correction procedures resulted in useable data for about 

5,000 SNFs. For each facility, we compared the 20019

 nurse staffing ratio to 

the staffing ratio in 2000. We were not able to incorporate data reported 

after January 2002, in order to accommodate the schedule set by BIPA. To 

supplement this analysis, we also examined staffing ratio changes from 

1999 to 2000. In addition to analyzing these data, we interviewed 

representatives of three industry associations, CMS officials, and several 

independent researchers. Although OSCAR data allowed us to compare 

staffing ratios before and after the 16.66 percent payment increase took 

effect, our analysis was limited in several ways. OSCAR data pertain to a 

limited period—2 weeks for staffing and 1 day for the number of patients. 

Further, staffing cannot be examined separately for Medicare patients, 

who represent about 11 percent of total SNF patients; Medicaid patients, 

who represent over 66 percent of total SNF patients; or patients whose 

care is paid for by other sources, who represent about 23 percent of total 

SNF patients. For more details on our data and methods, see appendix I. 

We performed our work from November 2001 through October 2002 in 

accordance with generally accepted government auditing standards. 

Our analysis of available data shows that, in the aggregate, SNFs’ nurse 

staffing ratios changed little after the increase in the nursing component of 

the Medicare payment rate took effect. Overall, SNFs’ average nursing 

time increased by 1.9 minutes per patient day, relative to their average in 

2000 of about 3 and one-half hours of nursing time per patient day. There 

was a small shift in the mix of nursing time that SNFs provided, with 

slightly less registered nurse (RN) time coupled with slightly more 

licensed practical nurse (LPN) and nurse aide time. For most types of 

 8

CMS officials have stated that OSCAR data are accurate in the aggregate—that is, at 

national and state levels—but have indicated that data on some individual facilities may not 

be accurate. We report OSCAR data only at national and state levels. See HCFA, Report to 

Congress: Appropriateness of Minimum Nurse Staffing Ratios in Nursing Homes, Phase 

I (Baltimore, Md.: July 2000). 

9

Our 2001 OSCAR data include May through December 2001, after the payment increase 

took effect. As a result, we only reviewed data for an 8-month period after the payment 

increase was implemented. We were not able to review data for a later period when 

facilities might have used the payment increase differently. 

Results in Brief 
Page 4 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

SNFs, increases in staffing ratios were small. Further, we found that the 

share of SNF patients covered by Medicare was not a factor in whether 

facilities increased their nursing time. Similarly, SNFs that had total 

revenues considerably in excess of costs before the added payments took 

effect did not increase their staffing substantially more than others. 

Although facilities with relatively low staffing ratios in 2000 increased their 

staffing ratios in 2001, highly staffed SNFs decreased their staffing ratios. 

We observed a similar pattern of staffing changes between 1999 and 2000, 

before the increased nursing component payment was implemented. This 

indicates that the nursing component payment increase was likely not a 

factor in the added nursing time among lower-staffed facilities. However, 

unlike most facilities, SNFs in four states increased their staffing by 15 to 

27 minutes per patient day; three of these states—Arkansas, North Dakota, 

and Oklahoma—had made Medicaid payment or policy changes aimed at 

raising or maintaining facilities’ nursing staff. 

Our analysis of available data on SNF nursing staff indicates that, in the 

aggregate, SNFs did not have significantly higher nursing staff time after 

the increase to the nursing component of Medicare’s payment. We believe 

that the Congress should consider our finding that increasing the Medicare 

payment rate was not effective in raising nurse staffing as it determines 

whether to reinstate the increase to the nursing component of the 

Medicare SNF rate. 

In written comments on a draft of this report, CMS stated that our findings 

are consistent with its expectations as well as its understanding of other 

research in this area. Industry representatives provided oral comments in 

response to a draft of this report. Saying that our statements were too 

strong given the limitations of the study, they objected to our conclusions 

and matter for congressional consideration in the draft report. In 

conducting our study, we recognized the limitations of the data and the 

analyses we could perform and, when possible, performed tests to 

determine whether they affected our results. Taking account of these tests 

as well as the consistency of our results, we determined that the evidence 

was sufficient to conclude that the increased payment did not result in 

higher nursing staff time. However, we modified our conclusions to 

reiterate the limitations of our study. We rephrased the matter for 

congressional consideration to reflect the fact that the increase has lapsed 

since we drafted this report. 
Page 5 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

Medicare covers SNF care for beneficiaries who need daily skilled nursing 

care or therapy for conditions related to a hospital stay of at least 3 

consecutive calendar days, if the hospital discharge occurred within a 

specific period—generally, no more than 30 days—prior to admission to 

the SNF. For qualified beneficiaries, Medicare will pay for medically 

necessary SNF services, including room and board; nursing care; and 

ancillary services, such as drugs, laboratory tests, and physical therapy, for 

up to 100 days per spell of illness.10 In 2002, beneficiaries are responsible 

for a $101.50 daily copayment after the 20th day of SNF care, regardless of 

the cost of services received. 

Eighty-eight percent of SNFs are freestanding—that is, not attached to a 

hospital. The remainder are hospital-based.11 SNFs differ by type of 

ownership: 66 percent of SNFs are for-profit entities, 28 percent of SNFs 

are not-for-profit, and a small fraction of SNFs—about 5 percent—are 

government-owned.12 About three-fifths of SNFs are owned or operated by 

chains—corporations operating multiple facilities. 

To be a SNF, a facility must meet federal standards to participate in the 

Medicare program.13 SNFs provide skilled care to Medicare patients and 

usually also provide care to Medicaid and private pay patients. Medicare 

pays for a relatively small portion of patients cared for in SNFs—about 11 

percent. Over 66 percent of SNF patients have their care paid for by 

Medicaid, and another 23 percent have their care paid for by other sources 

or pay for the care themselves. 

In the Balanced Budget Act of 1997 (BBA), the Congress established the 

PPS for SNFs.14 Under the PPS, SNFs receive a daily payment that covers 

almost all services provided to Medicare beneficiaries during a SNF stay, 

 10A spell of illness is a period that begins when a Medicare beneficiary is admitted to a 

hospital and ends when a beneficiary has not been an inpatient of a hospital or SNF for 60 

consecutive days. A beneficiary may have more than one spell of illness per year that is 

covered by Medicare. 

11CMS considers a facility to be hospital-based if it is “under the administrative control of a 

hospital.” 

12Government-owned facilities are operated primarily by counties or cities. 

13State agencies, under contract to CMS, conduct initial and follow-up visits to assess 

compliance with federal standards—Medicare’s and Medicaid’s conditions of participation. 

14Pub. L. No. 105-33, § 4432, 111 Stat. 251, 414. 

Background 

Medicare Payment for SNF 

Care 
Page 6 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

which is adjusted for geographic differences in labor costs and differences 

in the resource needs of patients. Adjustments for resource needs are 

based on a patient classification system that assigns each patient to 1 of 44 

payment groups, known as resource utilization groups (RUG).15 For each 

group, the daily payment rate is the sum of the payments for three 

components: (1) the nursing component, which includes costs related to 

nursing as well as to medical social services and nontherapy ancillary 

services, (2) the therapy component, which includes costs related to 

occupational, physical, and speech therapy, and (3) the routine cost 

component, which includes costs for capital, maintenance, and food. The 

routine cost component is the same for all patient groups, while the 

nursing and therapy components vary according to the expected needs of 

each group. Before the 16.66 percent increase provided by BIPA took 

effect, the nursing component varied from 26 percent to 74 percent of the 

daily payment rate, depending on the patient’s RUG.16 In 2001, Medicare 

expenditures on SNF care were $13.3 billion. The 16.66 percent increase in 

the nursing component raised Medicare payments about $1 billion 

annually—about 8 percent of Medicare’s total annual spending on SNF 

care. 

The increase in the nursing component is one of several temporary 

changes made to the PPS payment rates since the PPS was implemented in 

1998. The Medicare, Medicaid, and SCHIP Balanced Budget Refinement 

Act of 1999 (BBRA) raised the daily payment rates by 20 percent for 15 

high-cost RUGs beginning in April 2000.17 BBRA also increased the daily 

rate for all RUGs by 4 percent for fiscal years 2001 and 2002.18 BIPA upped 

the daily payment rates by 6.7 percent for 14 RUGs, effective April 2001.19

This increase was budget neutral; that is, it modified BBRA’s 20 percent 

increase for 15 RUGs by taking the funds directed at 3 rehabilitation RUGs 

 15These groups are based on patient clinical condition, functional status, and use or 

expected use of certain types of services. Each RUG describes patients with similar care 

needs and has a corresponding payment rate. 

16These figures are for facilities in urban areas. For facilities in rural areas, the nursing 

component ranged from 23 percent to 72 percent of the total rate. 

17Pub. L. No. 106-113, App. F, § 101, 113 Stat. 1501, 1501A-324. 

18The 4 percent increase is based on the PPS daily rates that would have been in effect for 

those years without the 20 percent temporary increase for the 15 high-cost RUGs noted 

above. 

19BIPA § 314. 
Page 7 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

and applying those funds to all 14 rehabilitation RUGs.20 Two of these 

temporary payment changes, the 20 percent and 6.7 percent increases, will 

remain in effect until CMS refines the RUG system. CMS has announced 

that, although it is examining possible refinements, the system will not be 

changed for the 2003 payment year.21

In providing care to their patients, SNFs employ over 850,000 licensed 

nurses and nurse aides nationwide.22 Licensed nurses include RNs and 

LPNs.23 RNs generally manage patients’ nursing care and perform more 

complex procedures, such as starting intravenous fluids. LPNs provide 

routine bedside care, such as taking vital signs and supervising nurse 

aides. Aides generally have more contact with patients than other 

members of the SNF staff. Their responsibilities may include assisting 

individuals with eating, dressing, bathing, and toileting, under the 

supervision of licensed nursing and medical staff. 

Several studies have shown that nursing staff levels are linked to quality of 

care.24 The Social Security Act, which established and governs the 

Medicare program, requires that SNFs have sufficient nursing staff to 

provide nursing and related services to attain or maintain the highest 

practicable physical, mental, and psychosocial well-being of each patient, 

as determined by patient assessments and individual plans of care.25 More 

specifically, SNFs must have an RN on duty for at least 8 consecutive 

hours a day for 7 days per week, and must have 24 hours of licensed nurse 

 20The remaining 12 RUGs retained the 20 percent increase. 

21BIPA requires that CMS submit a report to the Congress on possible alternatives to the 

current RUG patient classification system by January 1, 2005. BIPA § 311(e). 

22This figure represents the number of full-time equivalents. 

23In some parts of the United States, LPNs are known as licensed vocational nurses (LVN). 

24See U.S. General Accounting Office, Nursing Homes: Quality of Care More Related to 

Staffing than Spending, GAO-02-431R (Washington, D.C.: June 13, 2002); Centers for 

Medicare & Medicaid Services, Report to Congress: Appropriateness of Minimum Nurse 

Staffing Ratios in Nursing Homes, Phase II Final Report (Baltimore, Md.: December 

2001); U.S. Department of Health and Human Services, Quality of Care in Nursing Homes: 

An Overview, Office of Inspector General (Washington, D.C.: March 1999); and Institute of 

Medicine, Nursing Staff in Hospitals and Nursing Homes: Is it Adequate? (Washington, 

D.C.: National Academy Press, 1996). 

2542 U.S.C. § 1395i-3(b) (2000). 

SNF Staffing 
Page 8 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

coverage per day.26 SNFs also must designate an RN to serve as the 

director of nursing on a full-time basis, and must designate a licensed 

nurse to serve as a charge nurse on each tour of duty.27

SNF staffing varies by type of facility and by state. Hospital-based SNFs 

tend to have higher staffing ratios than other SNFs. In 2001, hospital-based 

SNFs provided 5.5 hours of nursing time per patient day, compared with 

3.1 hours among freestanding SNFs. Hospital-based SNFs also rely more 

heavily on licensed nursing staff than do freestanding facilities, which rely 

more on nurse aides. Staffing also differs by state—from 2 hours and 54 

minutes per patient day in South Dakota in 2000 to 4 hours and 58 minutes 

per patient day in Alaska. 

Many states have established their own nursing staff requirements for 

state licensure, which vary considerably. Some states require a minimum 

number of nursing hours per patient per day, while others require a 

minimum number of nursing staff relative to patients. Some states’ 

requirements apply only to licensed nurses, while others apply to nurse 

aides as well. Some states also require an RN to be present 24 hours per 

day, 7 days per week. As of 1999, 37 states had nursing staff requirements 

that differed from federal requirements. Since 1998, many states have 

raised their minimum staffing requirements or have implemented other 

changes aimed at increasing staffing in nursing homes, such as increasing 

workers’ wages or raising reimbursement rates for providers whose 

staffing exceeds minimum requirements. 

While states have set minimum requirements for nursing staff, there are 

indications of an emerging shortage of nursing staff, particularly RNs, in a 

variety of health care settings.28 The unemployment rate for RNs in 2000 

was about 1 percent—very low by historical standards. As a result, SNFs 

must compete with other providers, such as hospitals, for a limited supply 

of nursing staff. According to associations representing the industry, 

 2642 C.F.R. § 483.30 (2001). 

27The Department of Health and Human Services may waive the requirement that a SNF 

provide the services of an RN for 8 hours a day, 7 days a week, including a director of 

nursing, in certain circumstances. However, according to CMS, few facilities have those 

requirements waived. 

28See U.S. General Accounting Office, Nursing Workforce: Emerging Nurse Shortages Due 

to Multiple Factors, GAO-01-944 (Washington, D.C.: July 10, 2001), and Centers for 

Medicare & Medicaid Services, Report to Congress: Appropriateness of Minimum Nurse 

Staffing Ratios in Nursing Homes, Phase II Final Report, ch. 4. 
Page 9 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

nursing homes have had difficulty recruiting and retaining staff. The 

American Health Care Association (AHCA)29 reported vacancy rates for 

nursing staff in nursing homes for 2001 ranging from 11.9 percent for aides 

to 18.5 percent for staff RNs.30 Labor shortages are generally expected to 

result in increased compensation—wages and benefits—as employers 

seek to recruit new workers and retain existing staff. Our analysis of 

Bureau of Labor Statistics (BLS) data shows that, from 1999 to 2000, 

average wages for nurses and aides employed by the nursing home 

industry increased by 6.3 percent, compared to 2.9 percent among workers 

in private industry and state and local government.31 Industry officials, 

citing a survey they commissioned, told us that wages have risen more 

rapidly since 2000.32

In general, SNF staffing changed little after April 1, 2001, when the 

increase in the nursing component of the PPS payment took effect. There 

was no substantial change in SNFs’ overall staffing ratios, though their mix 

of nursing hours shifted somewhat: SNFs provided slightly less RN time 

and slightly more LPN and nurse aide time in 2001. For most categories of 

SNFs—such as freestanding SNFs and SNFs not owned by chains—

increases in staffing ratios were small. Although SNFs with relatively low 

staffing ratios in 2000 increased their staffing ratios in 2001, SNFs with 

relatively high staffing ratios decreased their staffing. Our analysis 

indicates that the nursing component payment increase was unlikely to 

have been a factor in these staffing changes. Unlike most facilities 

nationwide, SNFs in four states increased their staffing by 15 or more 

minutes per patient day, following payment or policy changes in three of 

the states aimed at increasing or maintaining SNF nursing staff. 

 29AHCA represents for-profit and not-for-profit nursing facilities. 

30American Health Care Association, Results of the 2001 AHCA Nursing Position Vacancy 

and Turnover Survey (Washington, D.C.: Feb. 7, 2002). 

31These figures are based on data from BLS’s Occupational Employment Statistics and 

National Compensation Survey for 1999 and 2000. BLS’s 2001 Occupational Employment 

Statistics were not available at the time of our analysis. 

32The 2001 Nursing Facility Compensation Survey, sponsored by AHCA and the Alliance for 

Quality Nursing Home Care, was conducted by Muse and Associates and Buck Consultants. 

SNF Staffing Changed 

Little after Payment 

Increase Took Effect 
Page 10 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

No substantial change in SNFs’ overall staffing ratios occurred after the 

nursing component payment was increased. Between 2000 and 2001,33

SNFs’ average amount of nursing time changed little, remaining slightly 

under 3 and one-half hours per patient day.34 Although there was an 

increase of 1.9 minutes per patient day, it was not statistically significant.35

(See table 1.) According to our calculations, this change was less than the 

estimated average increase, across all SNF patients, of about 10 minutes 

per patient day that could have resulted if SNFs had devoted the entire 

nursing component increase to more nursing time.36

There was a small shift in the mix of nursing time that SNFs provided. On 

average, RN time decreased by 1.7 minutes per patient day. This was 

coupled with slight increases in LPN and nurse aide time, which rose by 

0.7 and 2.9 minutes per patient day, respectively. 

 33The 2001 data are from May through December 2001, after the increased nursing 

component payment took effect. 

34These staffing ratios, and the ratios presented throughout this report, are based on SNFs’ 

overall direct care nursing staff and the total number of patients; they are, therefore, 

facilitywide staffing ratios, rather than ratios specific to Medicare patients. 

35That is, the change was too small to be statistically distinguished from zero. Since we 

were only able to review data for a limited period after the payment increase was 

implemented, we compared SNFs’ staffing ratio changes over time to test whether this 

affected our results. When we compared the change in staffing ratios among facilities 

surveyed soon after the payment increase to those surveyed later in 2001, we found no 

significant difference. This suggests that our results were not affected by examining 

staffing soon after the payment change. SNFs responded similarly to the increase 

regardless of how much time had elapsed since its implementation. 

36The estimates ranged from 9.4 to 10.1 minutes, depending on whether we assumed 

relatively large—10 percent—or small—3 percent—increases in wage rates from 2000 to 

2001. 

SNF Staffing Changed 

Little after Payment 

Increase, Though Mix of 

Staffing Shifted Somewhat 
Page 11 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

Table 1: Average SNF Staffing Time by Type of Nurse, 2000 and 2001 

Average nursing time per patient day 

Nursing staff Calendar year 2000 May - December 2001 

Change in 

minutesa

RNs 30.0 minutes 28.3 minutes -1.7 minutes 

LPNsb 42.9 minutes 43.6 minutes 0.7 minutes 

Aidesc 2 hours, 10.0 minutes 2 hours, 12.9 minutes 2.9 minutes 

Total 3 hours, 22.9 minutes 3 hours, 24.8 minutes 1.9 minutes 

Note: Data include freestanding and hospital-based SNFs. 

a

For each category of nursing staff, the change in minutes was significant at the .05 level. The total 

change in nursing time, however, was not significant. 

b

LPNs are also known as LVNs. 

c

Aides include certified nurse aides, nurse aides in training, and medication aides/technicians. 

Source: GAO analysis of CMS’s OSCAR data. 

For most categories of SNFs, changes in staffing ratios were small. For 

example, freestanding facilities, which account for about 90 percent of 

SNFs nationwide, increased their nursing time by 2.1 minutes per patient 

day on average. Nonchain SNFs had an increase of 3.9 minutes per patient 

day. Hospital-based facilities and those owned by chains had nominal 

changes in nursing time. The changes in staffing for for-profit, not-forprofit, and government-owned facilities also were small. (See app. II.) 

The share of a SNF’s patients who were covered by Medicare was not a 

factor in whether facilities increased their nursing time. SNFs that relied 

more on Medicare would have received a larger increase in revenue due to 

the nursing component change, and might have been better able than 

others to raise staffing ratios. However, we found that freestanding SNFs 

in which Medicare paid for a relatively large share of patients37 increased 

their nursing time by 1.3 minutes per patient day—less than SNFs with 

 37For this analysis, we consider patients to be Medicare-covered if they are receiving 

Medicare-covered SNF care. Although a SNF may have a large number of patients who are 

Medicare beneficiaries, not all such patients necessarily receive Medicare-covered SNF 

care. For example, patients receiving long-term custodial care could be eligible for 

Medicare-covered services, but their SNF stays would not be paid for by Medicare. 
Page 12 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

somewhat smaller shares of Medicare patients, and not substantially more 

than SNFs with the smallest share of Medicare patients.38 (See table 2.) 

Table 2: Average Change in Nursing Time between 2000 and 2001 for Freestanding 

SNFs, Grouped by Medicare Patient Share 

Medicare patient share in 2000 (percentage)a

Change in minutes of nursing time 

per patient dayb

Less than 3.8 0.8 minutes

3.8 to 7.1 3.6 minutes

7.2 to 11.4 2.9 minutes

11.5 and higher 1.3 minutes

Note: The 2001 data are from May through December 2001, after the nursing component payment 

increase took effect. 

a

The four groups of SNFs are roughly equal in size. 

b

Between any two groups of SNFs (rows), there were no statistically significant differences in the 

change in minutes. For the two middle groups of SNFs, the change in minutes between 2000 and 

2001 was significant at the .05 level. 

Source: GAO analysis of CMS’s OSCAR data. 

Similarly, SNFs’ financial status was not an important factor affecting 

changes in nursing time. Although SNFs with higher total margins in 

200039—that is, those with revenues substantially in excess of costs—might 

have been best able to afford increases in nursing staff, those with the 

highest total margins did not raise their staffing substantially more than 

others. Changes in nursing time were minimal, regardless of SNFs’ 

financial status in 2000. For SNFs in the three groups with the highest 

margins, increases were about 3 to 4 minutes per day, compared to 2 

minutes per day for those with the lowest margins. (See table 3.) 

 38The average staffing levels in 2000 were similar for the groups with the highest and lowest 

Medicare patient shares—3 hours, 11 minutes of nursing time per patient day for the 

highest group, and 3 hours, 8 minutes for the lowest group. 

39A margin is the difference between revenues and costs, divided by revenues, and 

expressed as a percentage. 
Page 13 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

Table 3: Average Change in Nursing Time between 2000 and 2001 for Freestanding 

SNFs, Grouped by Total Margin 

Total margins in 2000 (range)a

Change in minutes of nursing time

 per patient dayb

Less than -3.4 2.1 minutes

-3.4 to 2.2 2.9 minutes

2.3 to 7.4 4.2 minutes

7.5 and higher 3.7 minutes

Note: The 2001 data are from May through December 2001, after the nursing component payment 

increase took effect. 

a

Total margins are expressed as percentages and are based on a SNF’s cost reporting year, which 

corresponds to its fiscal year that begins during the federal fiscal year. The four groups of SNFs are 

roughly equal in size. 

b

Between any two groups of SNFs (rows), there were no statistically significant differences in the 

change in minutes. For each group of SNFs, however, the change in minutes between 2000 and 

2001 was significant at the .05 level, except for the lowest group (with total margins less than –3.4 

percent). 

Source: GAO analysis of CMS’s OSCAR data and 2000 Medicare cost reports. 

SNFs with relatively low initial staffing ratios—which may have had the 

greatest need for more staff—increased their staffing ratios substantially, 

while SNFs that initially were more highly staffed had a comparable 

decrease in staffing. Among freestanding SNFs that had the lowest staffing 

ratios in 2000, staffing time increased by 18.9 minutes per patient day.40

(See table 4.) Nearly all of the increase—over 15 minutes—was due to an 

increase in nurse aide time. LPN time increased by 3.2 minutes and RN 

time by 11 seconds on average. Among facilities with the highest staffing 

ratios in 2000, staffing decreased by 17.7 minutes.41 For these SNFs, as for 

those with the lowest staffing ratios, most of the overall change occurred 

among nurse aides: aide time decreased by over 10 minutes in 2001, while 

LPN and RN time decreased by 2.7 and 4.6 minutes, respectively. 

Despite the staffing increases among lower-staffed facilities, our analysis 

indicates that these staffing changes may not have resulted from the 

nursing component payment increase. We found that similar staffing 

changes occurred between 1999 and 2000—prior to the nursing 

component increase. Low-staffed facilities increased their staffing by 15.2 

 40When we looked at median changes in staffing rather than average changes, we found that 

these SNFs had a median increase of 13.6 minutes of nursing time. 

41These SNFs had a median decrease of 11 minutes. 

Lower-Staffed SNFs Added 

More Nursing Time, but 

the Increased Medicare 

Nursing Payment Likely 

Was Not the Cause 
Page 14 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

minutes per patient day in 2000, while high-staffed facilities decreased 

their staffing by 19.8 minutes.42 The changes that occurred during the two 

periods were similar, suggesting that the payment increase probably did 

not cause the change in the latter period. 

Table 4: Average Change in Nursing Time between 2000 and 2001 for Freestanding 

SNFs, Grouped by 2000 Staffing Ratiosa

Staffing ratio in 2000 (range)a

Change in minutes of nursing time 

per patient dayb

Less than 2 hours, 42 minutes 18.9 minutes

2 hours, 42 minutes to 

3 hours, 1 minute 

 7.6 minutes

3 hours, 2 minutes to 

3 hours, 25 minutes 

0.9 minutes

3 hours, 26 minutes and higher - 17.7 minutes

Note: The 2001 data are from May through December 2001, after the nursing component payment 

increase took effect. 

a

The four groups of SNFs are roughly equal in size. 

b

Between any two groups of SNFs (rows) the differences in the changes in minutes were statistically 

significant. For each group of SNFs, except the group with 3 hours, 2 minutes to 3 hours, 25 minutes 

of nursing time, the change in minutes was significant at the .05 level. 

Source: GAO analysis of CMS’s OSCAR data. 

Unlike most facilities nationwide, SNFs in four states—Arkansas, 

Nebraska, North Dakota, and Oklahoma—increased their staffing by 15 to 

27 minutes per patient day, on average.43 These increases could be related 

to state policies: according to state officials, three of the states had made 

Medicaid payment or policy changes aimed at increasing or maintaining 

facilities’ nursing staff. North Dakota authorized a payment rate increase, 

effective July 2001, that could be used for staff pay raises or improved 

benefits. Oklahoma increased its minimum requirements for staffing ratios 

in both September 2000 and September 2001, provided added funds to 

offset the costs of those increases, and raised the minimum wage for 

nursing staff such as RNs, LPNs, and aides. Arkansas switched to a full 

 42This pattern appears to reflect a common statistical phenomenon in which high and low 

values tend to move closer to the average over time. 

43Our sample included 30 percent of the facilities in Arkansas, 38 percent of the facilities in 

Nebraska, 62 percent of the facilities in North Dakota, and 16 percent of the facilities in 

Oklahoma. SNFs in four other states had staffing increases of 15 minutes or more, but 

those changes were not statistically significant.

In Several States, Staffing 

Ratios Rose Substantially 
Page 15 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

cost-based reimbursement system for Medicaid services in January 2001, 

in part to provide facilities with stronger incentives to increase staffing; 

the state had previously relied on minimum nurse staffing ratios. In 

Nebraska, no new state policies specific to nursing staff in SNFs were put 

in place during 2000 or 2001. 

The change to the nursing component of the SNF PPS payment rate was 

one of several increases to the rates since the PPS was implemented in 

1998. This temporary increase, enacted in the context of payment and 

workforce uncertainty, was intended to encourage SNFs to increase their 

nursing staff, although they were not required to spend the added 

payments on staff. In our analysis of the best available data, we did not 

find a significant overall increase in nurse staffing ratios following the 

change in the nursing component of the Medicare payment rate. Although 

the payment change could have paid for about 10 added minutes of 

nursing time per patient day for all SNF patients, we found that on average 

SNFs increased their staffing ratios by less than 2 minutes per patient day. 

Nurse staffing ratios fell in some SNFs during this period and increased in 

others by roughly an equal amount—the same pattern that occurred 

before the payment increase took effect. Our analysis—overall and for 

different types of SNFs—shows that increasing the nursing component of 

the Medicare payment rate was not effective in raising nurse staffing. 

Our analysis of available data on SNF nursing staff indicates that, in the 

aggregate, SNFs did not have significantly higher nursing staff time after 

the increase to the nursing component of Medicare’s payment. We believe 

that the Congress should consider our finding that increasing the Medicare 

payment rate was not effective in raising nurse staffing as it determines 

whether to reinstate the increase to the nursing component of the 

Medicare SNF rate. 

We received written comments on a draft of this report from CMS and oral 

comments from representatives of the American Association of Homes 

and Services for the Aging (AAHSA), which represents not-for-profit 

nursing facilities; AHCA, which represents for-profit and not-for-profit 

nursing facilities; and the American Hospital Association (AHA), which 

represents hospitals. 

CMS said that our findings are consistent with its expectations as well as 

its understanding of other research in this area. CMS also stated that our 

Conclusions 

Matter for 

Congressional 

Consideration 

Agency Comments 

and Our Evaluation 

CMS 
Page 16 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

report is a useful contribution to the ongoing examination of SNF care 

under the PPS. CMS’s comments appear in appendix III. 

Representatives from the three associations who reviewed the draft report 

shared several concerns. First, indicating that our statements were too 

strong given the limitations of the study, they objected to the report’s 

conclusions and matter for congressional consideration. Second, they 

noted that the draft should have included information about the context in 

which SNFs were operating at the time of the Medicare payment increase, 

specifically, the nursing shortage and SNF staff recruitment and retention 

difficulties. Finally, they noted that SNFs could have used the increased 

Medicare payments to raise wages or improve benefits rather than hire 

additional nursing staff. 

The industry representatives expressed several concerns about the 

limitations of our data and analysis. The AAHSA representatives noted 

that, for individual SNFs, the accuracy of OSCAR is questionable; they 

agreed, however, that the average staffing ratios we reported for different 

types of SNFs looked reasonable and were consistent with their 

expectations. The AHA representatives said that, while OSCAR data are 

adequate for examining staffing ratios, we should nonetheless have used 

other sources of nurse staffing data—such as payroll records and Medicaid 

cost reports—before making such a strong statement to the Congress. The 

AHCA representatives noted that, due to the limitations of OSCAR data, 

our analyses of staffing ratios reflect staffing for all SNF patients rather 

than staffing specifically for SNF patients whose stays are covered by 

Medicare. They stressed that the small increase in staffing for patients 

overall could have represented a much larger increase for Medicarecovered SNF patients. In addition, representatives from both AHCA and 

AHA were concerned that our period of study after the payment 

increase—May through December 2001—was too short to determine 

whether SNFs were responding to the added payments. They also cited 

delays in SNFs being paid under the increased rates as an explanation for 

our findings. The AHCA representatives further noted that the lack of 

change in staffing was not surprising, given the short period, and that the 

payment increase was temporary, applied to only one payer, and affected 

only about 10 to 12 percent of SNFs’ business. AAHSA representatives 

noted that, to be meaningful, staffing ratios must be adjusted for acuity—

the severity of patients’ conditions. 

Representatives from all three groups also stated that the report lacked 

sufficient information on contextual factors that could have affected SNF 

Industry Associations 
Page 17 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

staffing ratios during our period of study. They said that we should have 

provided information on the nursing shortage as well as on SNF staff 

recruitment and retention difficulties. They further stated that SNFs’ 

difficulties in recruiting and retaining staff could explain why we found 

little change in nurse staffing ratios. The AAHSA representatives were 

concerned that the report omitted information on the economic 

slowdown’s effect on state budgets and Medicaid payment rates, which 

could have discouraged SNFs from hiring during the period of the 

increased nursing component. Finally, both AAHSA and AHA 

representatives commented that the report gave too little attention to state 

minimum staffing requirements, indicating that SNFs would be more 

responsive to those requirements than to the Medicare payment increase. 

The AAHSA representatives noted that facilities may have increased their 

nursing staff to meet state minimum staffing requirements prior to the 

Medicare increase. The AHA representatives stated that we may not have 

found staffing increases because, when states require a minimum level of 

staff, facilities tend to staff only to that minimum. They also commented 

that state requirements may have had a greater effect on staffing than the 

nursing component increase, which was temporary and had only been in 

effect for a limited time. 

Representatives from all three groups noted that facilities could have 

opted to raise wages, improve benefits, or take other steps to recruit or 

retain staff, rather than hire additional nurses or aides. AHA added that we 

did not consider whether, prior to the rate increase, nurse staffing was 

adequate; if it was, SNFs may have chosen to spend the added Medicare 

payments on retention rather than on hiring. In addition, AASHA and 

AHCA representatives noted that we did not address what would happen 

to nursing staff and margins if the payment increase were not in place. The 

AAHSA representatives stated that, without the increase, staffing might 

have decreased. AHCA representatives noted that we should have 

considered the implications for SNF margins of not continuing the 

payment increase. 

As noted throughout the draft report, in conducting our study we 

considered the limitations of the data and the analyses we could perform. 

We therefore tested whether these limitations affected our results. Taking 

account of those tests and the consistency of our findings across 

categories of SNFs, we determined that the available evidence was 

sufficient to conclude that the increased payment did not result in higher 

nursing staff time. Our evidence consistently shows that staffing ratios 

changed little after the nursing component payment increase was 

Our Response 
Page 18 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

implemented. However, we modified our conclusions to reiterate the 

limitations of our study. 

Regarding the representatives’ specific concerns about the limitations of 

our data and analysis: 

• In the draft report, we detailed our efforts to correct OSCAR data errors. 

We have no evidence that OSCAR data are biased in the aggregate or that 

errors in OSCAR data would have understated the change in nurse staffing 

ratios. 

• In the draft report we noted that neither payroll records nor Medicaid cost 

reports were feasible sources of staffing data for this study. We have no 

reason to think that our results would have been different if we had used 

those data sources because a HCFA study found that those other sources 

yielded comparable aggregate staffing levels to those in OSCAR.44 We 

believe that the data from OSCAR were appropriate for examining staffing 

ratio changes because OSCAR is the only nationally uniform data source 

that allowed us to compare staffing ratios before and after the payment 

increase. 

• In the draft report, we stated that while nurse staffing ratios apply to all 

SNF patients and not just Medicare patients, we found no relationship 

between changes in staffing ratios and the percentage of a SNF’s patients 

paid for by Medicare. Specifically, staffing increases were no larger in 

SNFs with a greater percentage of Medicare patients than in those with a 

smaller percentage of Medicare patients. 

• The staffing changes in SNFs surveyed in the months just after the 

payment increase was implemented differed little from staffing changes of 

those SNFs surveyed later in 2001. Because we found no relationship 

between SNFs’ staffing ratio changes and the amount of time that had 

passed since the payment increase (which ranged from 1 to 9 months), we 

believe that our period of study was sufficiently long to determine whether 

SNFs were responding to the payment increase. We have added 

information on this analysis to the report. 

• We agree that adjusting for patients’ acuity is particularly important for 

comparing staffing among different facilities; however, acuity averaged 

over all facilities varies little over short periods.45 Moreover, unless 

 44See HCFA, Report to Congress: Appropriateness of Minimum Nurse Staffing Ratios in 

Nursing Homes, Phase I. HCFA’s analysis was based in part on data from a special survey 

of payroll records from facilities in Ohio. 

45See Medicare Payment Advisory Commission, Report to the Congress: Medicare Payment 

Policy (Washington, D.C.: March 2001). 
Page 19 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

patients’ acuity declined after the nursing component increase—and we 

have no evidence that it did—adjusting for acuity would not have affected 

our finding that nursing staff time changed little. 

Regarding representatives’ concerns that we did not include sufficient 

information on external factors affecting SNFs: 

• We added information to the report on issues related to the nursing 

workforce. 

• Hiring difficulties would not have prevented SNFs from expanding the 

hours of their existing nursing staff or using temporary nurses and aides 

from staffing agencies—which would have been reflected in staffing ratios. 

• With respect to the possible influence of a weak economy on Medicaid 

payments and SNF staffing levels, we noted in the draft report that the 

pattern of nursing staff changes from 2000 to 2001 was similar to the 

pattern from 1999 to 2000—a period when the economy was considerably 

stronger. 

• If SNFs increased nursing staff in response to new state requirements 

during 2001, our study would have attributed these increases to the 

Medicare payment change. 

Regarding the representatives’ statements about alternate ways SNFs 

could have used the increased Medicare payments: 

• To the extent that SNFs used the added Medicare payments for higher 

wages or benefits, they may have reduced staff vacancies, which in turn 

may have resulted in higher staffing ratios. However, we found little 

change in nurse staffing ratios after the Medicare payment increase. 

Regarding the representatives’ statements about the adequacy of SNF 

staffing: 

• Because staffing adequacy was not within the scope of our study, we did 

not consider whether staffing was adequate prior to the rate increase, or 

whether this influenced SNFs’ hiring decisions. The Congress directed 

CMS to address this issue, which it did in two reports. The first report, 

published in 2000, suggested that staffing might not be adequate in a 

significant number of SNFs. This was reaffirmed in CMS’s recent report.46

 46See HCFA, Report to Congress: Appropriateness of Minimum Nurse Staffing Ratios in 

Nursing Homes, Phase I and CMS, Report to Congress: Appropriateness of Minimum 

Nurse Staffing Ratios in Nursing Homes, Phase II Final Report.
Page 20 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

CMS, AAHSA, AHCA, and AHA also provided technical comments, which 

we incorporated as appropriate. 

We are sending copies of this report to the Administrator of CMS, 

interested congressional committees, and other interested parties. We will 

also provide copies to others upon request. In addition, the report is 

available at no charge on the GAO Web site at http://www.gao.gov. 

If you or your staffs have any questions, please call me at (202) 512-7114. 

Other GAO contacts and staff acknowledgments are listed in appendix IV. 

Laura A. Dummit 

Director, Health Care—Medicare Payment Issues 
Appendix I: Data Source and Data Verification 

Methods for Nurse Staffing Ratio Analysis 

Page 21 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

This appendix describes the selection of the data source for our analysis, 

the characteristics of that data source, and procedures used to verify data 

accuracy and make adjustments. 

To assess the impact on nurse staffing ratios of the April 1, 2001, increase 

in the nursing component of the SNF payment, we needed a nationally 

uniform data source that included the number of patients and the number 

of nursing staff (full-time equivalents (FTE)) or nursing hours, for two 

periods—before April 1, 2001, to establish a baseline, and after April 1, 

2001. We considered several sources of nursing staff data, including SNF 

payroll data, Medicaid cost reports, and CMS’s OSCAR system. 

We determined that payroll records could not be used for several reasons. 

CMS has collected and analyzed nursing home payroll data in several 

states and has found that it is difficult to ensure that the staffing data refer 

to hours worked (as required for an analysis of nurse staffing ratios) rather 

than hours paid, which includes time such as vacation and sick leave.1

CMS also found that although current nursing home payroll records were 

usually available, older records were difficult to obtain; consequently, it is 

unlikely that we would have been able to get records prior to the rate 

increase. Finally, payroll records do not include information on the 

number of patients and would have had to be supplemented with other 

data. 

Similarly, Medicaid cost reports were not an appropriate source of data. 

While these reports by SNFs to state Medicaid agencies contain data on 

both patients and nursing staff, Medicaid cost reports do not permit a 

comparison of staffing ratios before and after the 16.66 percent increase in 

the nursing component because these reports cover a 12-month period 

that cannot be subdivided. Furthermore, these reports do not contain 

nationally uniform staffing data because the categories and definitions 

differ from state to state. Finally, the 2001 reports were not available in 

time for our analysis. 

OSCAR is the only uniform data source that contains data on both patients 

and nursing staff. Moreover, OSCAR data are collected at least every 15 

 1

See CMS, Report to Congress: Appropriateness of Minimum Nurse Staffing Ratios in 

Nursing Homes, Phase II Final Report (Baltimore, Md.: December 2001). 

Appendix I: Data Source and Data 

Verification Methods for Nurse Staffing Ratio 

Analysis 

Data Sources Considered 
Appendix I: Data Source and Data Verification 

Methods for Nurse Staffing Ratio Analysis 

Page 22 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

months, allowing us to compare staffing ratios before and after the 16.66 

percent increase in the nursing component. 

The states and the federal government share responsibility for monitoring 

compliance with federal standards in the nation’s roughly 15,000 SNFs. To 

be certified for participation in Medicare, Medicaid, or both, a SNF must 

have had an initial survey as well as subsequent, periodic surveys to 

establish compliance. On average, SNFs are surveyed every 12 to 15 

months by state agencies under contract to CMS. In a standard survey,2

 a 

team of state surveyors spends several days at the SNF, conducting a 

broad review of care and services to ensure that the facility complies with 

federal standards and meets the assessed needs of the patients. Data on 

facility characteristics, patient characteristics, and staffing levels are 

collected on standard forms. These forms are filled out by each facility at 

the beginning of the survey and are certified by the facility as being 

accurate. After the survey is completed, the state agency enters the data 

from these forms into OSCAR, which stores data from the most current 

and previous three surveys. 

Although OSCAR was the most suitable data source available for our 

analysis, it has several limitations. First, OSCAR provides a 2-week 

snapshot of staffing and a 1 day snapshot of patients at the time of the 

survey, so it may not accurately depict the facility’s staffing and number of 

patients over a longer period. Second, staffing is reported across the entire 

facility, while the number of patients are reported only for Medicare- and 

Medicaid-certified beds. OSCAR, like other data sources, does not 

distinguish between staffing for Medicare patients and staffing for other 

patient groups. Finally, the Health Care Financing Administration (HCFA) 

reported that OSCAR data are unreliable at the individual SNF level.3

However, the agency’s recent analysis has concluded that the OSCARbased staffing measures appear “reasonably accurate” at the aggregate 

level (e.g., across states). Neither CMS nor the states attempt to verify the 

accuracy of the staffing data regularly. 

 2

In addition to the standard survey, state agencies conduct other surveys including 

complaint surveys. 

3

See HCFA, Report to Congress: Appropriateness of Minimum Nurse Staffing Ratios in 

Nursing Homes, Phase I (Baltimore, Md.: July 2000). 

OSCAR Data 
Appendix I: Data Source and Data Verification 

Methods for Nurse Staffing Ratio Analysis 

Page 23 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

In addition to limitations inherent in OSCAR data, our analysis was limited 

in several ways. First, our sample included only SNFs for which OSCAR 

data were available both before and after the 16.66 percent increase in the 

nursing component took effect. Second, our analysis of staffing ratios after 

the increase took effect was limited to data collected from May through 

December 2001. As a result, we only reviewed data for 8 months after the 

payment increase was implemented, although our results do not appear to 

be affected by any seasonal trends in staffing.4

 We were not able to review 

data for a later period when facilities might have used the payment 

increase differently.5

 Finally, due to data entry lags, when we drew our 

sample in January 2002, OSCAR did not include data from some facilities 

surveyed from May through December 2001.6

To determine the change in nurse staffing ratios, we selected all facilities 

surveyed from May through December 2001 that also had a survey during 

2000, which could serve as the comparison. This sample contained OSCAR 

data for 6,522 facilities. (See table 5.) Although not a statistical sample that 

can be projected to all SNFs using statistical principles, the sample is 

unlikely to be biased because it was selected on the basis of survey month. 

Our sampling procedure, in which selection depended solely on the time 

of survey, was unlikely to yield a sample with characteristics that differ 

substantially from those of the entire population of SNFs. We found no 

significant differences between these 6,522 SNFs and the 13,454 SNFs that 

were surveyed in calendar year 2000, in terms of various characteristics—

the proportion that are hospital-based, the proportion that are for-profit, 

the share of a facility’s patients that are paid for by Medicare, and the 

 4

To test whether our results reflected any seasonal trends in staffing, we examined the 

change in nurse staffing ratios among facilities surveyed from May through December of 

both 2000 and 2001. We found that these facilities had a small change in their nurse staffing 

ratios that was similar to the change among facilities that were surveyed at any time during 

calendar year 2000 and from May to December 2001. 

5

Although the payment increase began with services furnished on or after April 1, 2001, 

according to CMS, facilities would not have begun to receive the added payments until May 

1, 2001, because of the time it takes to process claims. We compared the change in staffing 

ratios among facilities surveyed in May and June 2001 to those surveyed in July and August 

2001 and found no significant difference. This suggests that the results were not affected by 

examining staffing soon after the payment change. 

6

We compared the change in staffing ratios among SNFs surveyed from May through 

August 2001 to the change among those surveyed later in the year—the period for which 

state agencies had not yet entered all survey data into OSCAR—and found no significant 

difference. 

Limitations to Our Analysis 

Creation of the Sample 
Appendix I: Data Source and Data Verification 

Methods for Nurse Staffing Ratio Analysis 

Page 24 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

capacity of the facilities. However, our sample was not distributed across 

states like the population of SNFs. (See table 6.) This may be because state 

agencies differ in the amount of time required to complete entry of survey 

data into OSCAR. In addition, we excluded from our sample 449 SNFs that, 

based on their 2000 Medicare claims data, had received payments from 

Medicare that were not determined under the PPS. The resulting sample 

had 6,073 facilities—over one-third of all SNFs. 

Table 5: Creation of Our Sample of SNFs 

Number of SNFs 

Total SNFs in 2000 OSCAR file (no duplicates) 13,454 

Total SNFs in 2001 OSCAR file 14,760 

SNFs surveyed from May 2001 through December 2001 

6,775 

SNFs also with survey in calendar year 2000 6,522 

SNFs that had received Medicare payments not determined under 

the PPS -449 

Original sample 6,073 

Source: GAO analysis of CMS’s OSCAR data and Medicare claims data. 

Table 6: Distribution of SNFs across States (in Percentages) 

All SNFs with OSCAR data in

calendar year 2000 (n=13,454)

Sample SNFsa

(n=6,522)

Alabama 1.34 1.84

Alaska 0.10 0.08

Arizona 0.99 0.86

Arkansas 1.40 1.15

California 7.50 7.65

Colorado 1.32 1.27

Connecticut 1.77 2.02

Delaware 0.27 0.28

District of Columbia 0.13 0.11

Florida 5.01 5.24

Georgia 2.19 2.81

Hawaii 0.27 0.25

Idaho 0.54 0.69

Illinois 4.60 4.35

Indiana 3.43 3.77

Iowa 2.00 2.18

Kansas 1.86 1.59
Appendix I: Data Source and Data Verification 

Methods for Nurse Staffing Ratio Analysis 

Page 25 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

All SNFs with OSCAR data in

calendar year 2000 (n=13,454)

Sample SNFsa

(n=6,522)

Kentucky 2.01 2.13

Louisiana 1.79 1.79

Maine 0.85 0.95

Maryland 1.68 0.61

Massachusetts 3.20 2.59

Michigan 2.80 3.51

Minnesota 2.75 2.81

Mississippi 0.97 1.18

Missouri 3.26 2.61

Montana 0.65 0.58

Nebraska 1.05 1.23

Nevada 0.33 0.21

New Hampshire 0.38 0.32

New Jersey 2.42 1.98

New Mexico 0.46 0.43

New York 4.39 3.31

North Carolina 2.83 3.13

North Dakota 0.63 0.81

Ohio 5.72 5.80

Oklahoma 1.46 0.52

Oregon 0.88 1.07

Pennsylvania 5.34 5.78

Rhode Island 0.62 0.64

South Carolina 1.22 1.29

South Dakota 0.64 0.66

Tennessee 1.84 1.98

Texas 7.20 7.41

Utah 0.57 0.74

Vermont 0.28 0.31

Virginia 1.61 1.72

Washington 1.86 2.12

West Virginia 0.81 0.37

Wisconsin 2.53 3.01

Wyoming 0.24 0.26

Note: These percentages do not add to 100 because we did not include the small percentage of 

SNFs located in Puerto Rico, Guam, and the United States Virgin Islands. 

a

The sample includes all SNFs with OSCAR data for both calendar year 2000 and May to December 

2001. 

Source: GAO analysis of CMS’s OSCAR data. 
Appendix I: Data Source and Data Verification 

Methods for Nurse Staffing Ratio Analysis 

Page 26 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

To assess the accuracy of the OSCAR data in our sample, we applied 

decision rules developed by CMS for its study of minimum nurse staffing 

ratios to identify facilities with data that appeared to represent data entry 

or other reporting errors.7 In addition, we identified facilities in our sample 

that had changes in their nurse staffing ratios greater than 100 percent, but 

that did not report 100 percent changes in both total patients and total 

beds. Using these rules, we identified 570 facilities for review. For 536 of 

these facilities, we obtained the original forms completed by SNF staff and 

used for entering data into OSCAR, from the state survey agencies. We 

compared the data on the forms to the OSCAR entries and identified 159 

facilities with data entry errors. For these facilities, we corrected the data, 

although 12 continued to be outliers and were excluded. For 179 facilities, 

we telephoned the SNF to verify its data; 65 facilities confirmed that 

OSCAR correctly reported their data. Based on the information gathered in 

these calls, we were able to correct the data for an additional 47 facilities. 

We also excluded 35 facilities for which we could not correct the data. In 

addition, we excluded 915 SNFs with more total beds than certified beds 

because they may have inaccurate staffing ratios.8

 Other facilities were 

excluded because we did not receive their forms, we were unable to call 

the SNFs, or we did not receive replies from them. After these exclusions, 

our final sample contained 4,981 SNFs. (See table 7.) 

 7

These rules identified facilities that reported more patients than beds, 12 or more hours of 

nursing time per patient day, less than 30 minutes of nursing time per patient day, and any 

hours coded as “999”—which could indicate reporting error. Other researchers who use 

OSCAR data have developed similar decision rules. Although we also initially used a CMS 

rule to identify facilities that had no staff registered nurse (RN) hours but 60 or more beds, 

we did not exclude facilities based on this rule because we later determined it was not a 

good indicator of problem data. After reviewing the federal SNF staffing regulations and 

discussing these requirements with a number of SNFs, we determined that a SNF could 

have 60 or more beds and have no RNs except for administrative staff. 42 C.F.R . § 483.23 

(2001). 

8

Facilities are instructed to report only patients in certified beds. As a result, the number of 

patients reported in OSCAR for these facilities may not truly reflect the number of patients 

who received care from nursing staff. 

Validating and Correcting 

OSCAR Data 
Appendix I: Data Source and Data Verification 

Methods for Nurse Staffing Ratio Analysis 

Page 27 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

Table 7: Exclusions from the Sample 

 Number of SNFs

Original sample 6,073

Facilities with edited data that were still identified as outliers 12

Facilities for which we could not correct the data 35

Facilities that had closed 3

Facilities with more total beds than certified beds 915a

Facilities for which we did not receive forms 34

Facilities that we were unable to call 81

Facilities that did not reply 12

Final sample 4,981

a

These SNFs were excluded because they may have inaccurate staffing ratios. Facilities are 

instructed to report only patients in certified beds. As a result, the number of patients reported in 

OSCAR for these facilities may not reflect the number of patients who received care from nursing 

staff. 

Source: GAO analysis of CMS’s OSCAR data. 

We calculated nurse staffing ratios—hours per patient day—for each 

facility by dividing the total nursing hours9

 by the estimated number of 

patient days.10 We calculated nurse staffing ratios for all nursing staff as 

well as for each category of staff: RNs, LPNs, and aides. We also calculated 

the change in these ratios for each facility in our sample. We analyzed 

these changes in nurse staffing ratios overall and for several categories of 

SNFs, including for-profit, not-for-profit, and government-owned facilities. 

We also analyzed these changes based on each facility’s prior year staffing 

ratio. Finally, we supplemented the staffing data with cost and payment 

data from Medicare cost reports for 2000 and related the changes in nurse 

staffing ratios to each SNF’s total margin—a measure of its financial 

status. We tested whether staffing ratio changes from 2000 to 2001 were 

statistically significant—that is, statistically distinguishable from zero. In 

 9

Total nursing hours includes the number of full-time, part-time, and contract RN, licensed 

practical nurse (LPN), certified nurse aide (CNA), CNA-in-training, and medication 

technician hours reported in OSCAR for a 2-week period. Nursing hours do not include RN 

directors of nursing or nurses with administrative duties. In addition, nursing hours reflect 

the amount of time that nursing staff were at work, but do not necessarily reflect the time 

they spent with patients. For example, they may spend a portion of their day in training or 

on breaks. 

10We estimated patient days by multiplying by 14 the number of patients reported in OSCAR 

for 1 day. 

Nurse Staffing Ratios 
Appendix I: Data Source and Data Verification 

Methods for Nurse Staffing Ratio Analysis 

Page 28 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

addition, for the analyses of SNFs’ prior year staffing and their financial 

status, we tested whether, between any two groups of SNFs, the difference 

in their staffing ratio changes was statistically significant. 
Appendix II: Average Change in Nursing Staff 

Time between 2000 and 2001, Grouped by 

Category of SNF 

Page 29 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

Average nursing time per patient day 

Category Calendar year 2000 May-December 2001 

Change in 

minutes 

Hospital-based 5 hours, 32.1 minutes 5 hours, 32.0 minutes -0.1 minutes 

Freestanding 3 hours, 6.7 minutes 3 hours, 8.9 minutes 2.1 minutes 

 

For-profit 3 hours, 8.3 minutes 3 hours, 9.5 minutes 1.3 minutes 

Not-for-profit 3 hours, 51.9 minutes 3 hours, 54.6 minutes 2.7 minutes 

Government 3 hours, 53.8 minutes 3 hours, 58.9 minutes 5.0 minutes 

 

Chain 3 hours, 14.9 minutes 3 hours, 15.4 minutes 0.5 minutes 

Nonchain 3 hours, 34.7 minutes 3 hours, 38.6 minutes 3.9 minutes 

Note: For freestanding and nonchain SNFs, the change in minutes between 2000 and 2001 was 

significant at the .05 level. Due to rounding, the reported change in minutes does not always match 

the 2000 and 2001 figures exactly. 

Source: GAO analysis of CMS’s OSCAR data. 

Appendix II: Average Change in Nursing Staff 

Time between 2000 and 2001, Grouped by 

Category of SNF 
Appendix III: Comments from the Centers for 

Medicare & Medicaid Services 

Page 30 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

Appendix III: Comments from the Centers for 

Medicare & Medicaid Services 
Appendix IV: GAO Contacts and Staff 

Acknowledgments 

Page 31 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

Jonathan Ratner, (202) 512-7107 

Phyllis Thorburn, (202) 512-7012 

Major contributors to this report were Robin Burke, Jessica Farb, and Dae 

Park. 

Appendix IV: GAO Contacts and Staff 

Acknowledgments 

GAO Contacts 

Acknowledgments 
Related GAO Products 

Page 32 GAO-03-176 Nursing Staff in Skilled Nursing Facilities 

Skilled Nursing Facilities: Providers Have Responded to New Payment 

System By Changing Practices. GAO-02-841. Washington, D.C.: August 23, 

2002. 

Nursing Homes: Quality of Care More Related to Staffing than Spending. 

GAO-02-431R. Washington, D.C.: June 13, 2002. 

Nursing Homes: Federal Efforts to Monitor Resident Assessment Data 

Should Complement State Activities. GAO-02-279. Washington, D.C.: 

February 15, 2002. 

Nursing Workforce: Emerging Nurse Shortages Due to Multiple Factors. 

GAO-01-944. Washington, D.C.: July 10, 2001. 

Nursing Homes: Success of Quality Initiatives Requires Sustained 

Federal and State Commitment. GAO/T-HEHS-00-209. Washington, D.C.: 

September 28, 2000. 

Nursing Homes: Sustained Efforts Are Essential to Realize Potential of 

the Quality Initiatives. GAO/HEHS-00-197. Washington, D.C.: September 

28, 2000. 

Related GAO Products 

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