Are Dual Eligibles Admitted to Poorer Quality Skilled Nursing Facilities

Dual eligibles, persons who qualify for both Medicare and Medicaid coverage, comprise ∼20% of Medicare beneficiaries (about 8.9 million individuals) (The Henry J. Kaiser Family Foundation 2009). They are considered to be the most vulnerable patients in the public insurance system (Thorpe and Philyaw 2010). Quality of care has been an important concern for the dual-eligible population (Merrill, Colby, and Hogan 1997; Haber and Mitchell 1999; Komisar, Feder, and Kasper 2005) and findings suggest that this population is less likely to receive specific types of preventative care, follow-up services, and screening. Studies have also found that nursing homes with a higher proportion of Medicaid-supported residents are associated with more quality deficiencies (Harrington et al. 2000), complaints (Stevenson 2006), lower family member satisfaction (Steffen and Nystrom 1997), and more hospitalizations (Carter and Porell 2003). Existing research on duals' nursing home care, however, has largely focused on the quality of care for long-stay residents. This study extends this literature by focusing on post-acute care in skilled nursing facilities (SNFs). In particular, we focus on disparities in SNF placement between dual beneficiaries and their Medicare-only counterparts. We build our analyses using the random utility maximization (RUM) model developed by McFadden (1974, 1978), where the key notion is that the selection of a particular SNF is based on all available information about competing SNFs. During the hospital discharge process, discharge planners generally provide a list of local nursing homes that provide SNF care to patients and their families and may help identify which SNFs have vacancies. Theoretically, the decision-makers and their advocates (patients, families, and discharge planners) rank available SNFs using attributes such as facility characteristics and proximity to the patient's homes and then select the SNF with the highest ranking. We call this ranking function the discharge function. The key feature of this framework is that it incorporates all observable attributes and proximity of the competing SNFs simultaneously in the discharge decision-making process. The purpose of this study is to estimate this discharge function and to show how this decision rule differs across dual-eligible and Medicare-only beneficiaries. Studies have documented different factors that drive the discrepancy in the quality of medical care across different income groups. Arguably, the most important of all these factors is the difference in ability to pay for care. Medicare covers up to 100 days of SNF care, providing full coverage for the first 20 days and then requiring a patient co-payment for the remaining eligible days of care. For calendar year 2012, the average SNF length of stay was roughly 27 days and the copayment amount was $144.50 per day (Medpac 2012). For duals, the copay is supposed to be paid through Medicaid, but in many states, SNFs do not receive this copayment (AHCA 2013). Another key factor contributing to differential quality of care is residential neighborhood. Quality of care has been shown to vary with geographic region (Welch et al. 1993; O'Connor et al. 1999; Baicker et al. 2004; Baicker, Chandra, and Skinner 2005; Baicker, Buckles, and Chandra 2006). Like many health care providers, SNFs in high poverty neighborhoods are likely to have poor quality (Feng et al. 2011). Distance has been shown to play an important role in the nursing home decision process (e.g., Zwanziger, Mukamel, and Indridason 2002; Shugarman and Brown 2006). In the presence of such distance preference, residential neighborhood acts as an important determinant of the quality of SNF care provided. Our framework directly incorporates distances of all the alternative SNFs from the residential neighborhood and originating hospital in the sorting process. In so doing, we separate the effect of neighborhood from the quality of the SNF per se. This article aims to identify whether any difference exists in the quality of the destination SNFs to which dual-eligible and Medicare-only beneficiaries are discharged after accounting for residential neighborhood, originating hospital, and other observable characteristics. A finding that dual eligibles are discharged to lower quality SNFs would suggest a failure of the public health insurance system to provide parity of care for all Medicare beneficiaries.