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

Summary: 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. 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.