Skilled Nursing Facilities: Available Data Show Average Nursing Staff Time Changed Little after Medicare Payment Increase
Published: 2002-11-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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 Congress, have expressed concern about the level of nursing staff in SNFs and the impact of inadequate staffing on the quality of care. GAO's 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 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. For most SNFs, increases in staffing ratios were small.
section_title: What GAO Found
paragraphs: Further, GAO 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 a total revenues considerably in excess of costs before the added payments took effect did not increase their staffing substantially more than others.

section_title: Letter
paragraphs: 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. The Congress, through the Medicare, Medicaid, and SCHIP  Benefits Improvement and Protection Act of 2000 (BIPA), 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,  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. 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.  Specifically, this report examines whether nurse staffing ratios—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), maintained by the Centers for Medicare  & Medicaid Services (CMS), 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  accuracy of the OSCAR data, we identified over 500 SNFs in our sample  that had apparent data entry or other data reporting errors, 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 2001 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.
subsections: section_title: Background
paragraphs: 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. 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. 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. 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. 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.
subsections: section_title: Medicare Payment for SNF Care
paragraphs: In the Balanced Budget Act of 1997 (BBA), the Congress established the  PPS for SNFs. Under the PPS, SNFs receive a daily payment that covers  almost all services provided to Medicare beneficiaries during a SNF stay,  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). 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. 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. BBRA also increased the daily  rate for all RUGs by 4 percent for fiscal years 2001 and 2002. BIPA upped  the daily payment rates by 6.7 percent for 14 RUGs, effective April 2001.  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  and applying those funds to all 14 rehabilitation RUGs. 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.
section_title: SNF Staffing
paragraphs: In providing care to their patients, SNFs employ over 850,000 licensed  nurses and nurse aides nationwide. Licensed nurses include RNs and  LPNs. 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. 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. 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  coverage per day. 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.
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. 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,  nursing homes have had difficulty recruiting and retaining staff. The  American Health Care Association (AHCA) 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. 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. Industry officials,  citing a survey they commissioned, told us that wages have risen more  rapidly since 2000.
section_title: SNF Staffing Changed Little after Payment Increase Took Effect
paragraphs: 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.
subsections: section_title: SNF Staffing Changed Little after Payment Increase, Though Mix of Staffing Shifted Somewhat
paragraphs: No substantial change in SNFs’ overall staffing ratios occurred after the  nursing component payment was increased. Between 2000 and 2001,  SNFs’ average amount of nursing time changed little, remaining slightly  under 3 and one-half hours per patient day. Although there was an  increase of 1.9 minutes per patient day, it was not statistically significant.  (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.
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.
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-for- profit, 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 patients increased  their nursing time by 1.3 minutes per patient day—less than SNFs with  somewhat smaller shares of Medicare patients, and not substantially more  than SNFs with the smallest share of Medicare patients. (See table 2.)
Similarly, SNFs’ financial status was not an important factor affecting  changes in nursing time. Although SNFs with higher total margins in  2000—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.)
section_title: Lower-Staffed SNFs Added More Nursing Time, but the Increased Medicare Nursing Payment Likely Was Not the Cause
paragraphs: 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.  (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. 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  minutes per patient day in 2000, while high-staffed facilities decreased  their staffing by 19.8 minutes. 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.
section_title: In Several States, Staffing Ratios Rose Substantially
paragraphs: 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. 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  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.
section_title: Conclusions
paragraphs: 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.
section_title: Matter for Congressional Consideration
paragraphs: 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.
section_title: Agency Comments and Our Evaluation
paragraphs: 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  report is a useful contribution to the ongoing examination of SNF care  under the PPS. CMS’s comments appear in appendix III.
subsections: section_title: Industry Associations
paragraphs: 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 Medicare- covered 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  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.
section_title: Our Response
paragraphs: 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  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. 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. Moreover, unless  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.
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.
section_title: Appendix I: Data Source and Data Verification Methods for Nurse Staffing Ratio Analysis
paragraphs: 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.
subsections: section_title: Data Sources Considered
paragraphs: 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.  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  months, allowing us to compare staffing ratios before and after the 16.66  percent increase in the nursing component.
section_title: OSCAR Data
paragraphs: 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, 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.  However, the agency’s recent analysis has concluded that the OSCAR- based 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.
section_title: Limitations to Our Analysis
paragraphs: 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. We were not able to review  data for a later period when facilities might have used the payment  increase differently. 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.
section_title: Creation of the Sample
paragraphs: 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  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.
section_title: Validating and Correcting OSCAR Data
paragraphs: 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. 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. 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.)
section_title: Nurse Staffing Ratios
paragraphs: We calculated nurse staffing ratios—hours per patient day—for each  facility by dividing the total nursing hours by the estimated number of  patient days. 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  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.
section_title: Appendix II: Average Change in Nursing Staff Time between 2000 and 2001, Grouped by Category of SNF
section_title: Appendix III: Comments from the Centers for Medicare & Medicaid Services
section_title: Appendix IV: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Acknowledgments
paragraphs: Major contributors to this report were Robin Burke, Jessica Farb, and Dae  Park.
section_title: Related GAO Products
paragraphs: 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.