Hospitalization of Nursing Home Residents: The Effects of States' Medicaid Payment and Bed-Hold Policies

Hospitalization of nursing home residents is prevalent throughout the U.S., but varies considerably both within and between states (Intrator and Mor 2004; Intrator, Zinn, and Mor 2004). Over 15 percent of long-stay nursing home residents are hospitalized within a given 6-month period (Intrator, Zinn, and Mor 2004). Hospitalizations are costly and put residents at risk for iatrogenic disease and delirium (Ouslander, Weinberg, and Phillips 2000). In addition to resident characteristics and severity of illness, facility, and market characteristics are associated with the likelihood of hospitalization of nursing home residents (Intrator, Zinn, and Mor 2004). Although hospitalization rates vary across states, even when controlling for facility and market factors, there has been little systematic study of the influence of state Medicaid nursing home policies on these rates. Over 60 percent of nursing home resident care, and an even higher percentage of long-stay resident care, is paid for by states' Medicaid programs that differ considerably in the generosity and method of payment (Harrington et al. 1999; Grabowski et al. 2004). States have broad discretion to set the daily Medicaid nursing home payment rate (Wiener and Stevenson 1998). States' nursing home policies have been shown to be associated with quality measures (Grabowski, Angelelli, and Mor 2004; Zhang and Grabowski 2004), expenditures (Harrington and Swan 1987), and access to services (Ettner 1993). In response to less generous Medicaid payments, nursing homes appear to reduce staffing (Cohen and Spector 1996; Grabowski 2001a, b; Grabowski, Angelelli, and Mor 2004; Intrator et al. 2005) and the use of nurse practitioners or physician assistants (NP/PAs; Intrator et al. 2005). In facilities with inadequate staffing, temporary acute conditions are more likely to occur, and less likely to be well managed, typically necessitating hospitalization (Ackermann and Kemle 1998; Intrator, Castle, and Mor 1999; Reuben et al. 1999; Intrator and Mor 2004; Intrator, Zinn, and Mor 2004). Yet, there has been insufficient research on the direct relationship between state Medicaid nursing home policies and hospitalizations. In the only published study of this issue, Intrator and Mor used 1993 data from nursing homes in 10 states and showed that a $10 Medicaid payment rate higher than the average Medicaid rate across states ($100) was associated with a 9 percent lower odds of hospitalization (Intrator and Mor 2004). Bed-hold policies pay nursing homes to reserve the bed of acutely hospitalized residents, and vary across states in the proportion of the average Medicaid daily rate paid for bed-hold, and the number of days covered. Some states also require a minimum facility occupancy rate to qualify for bed-hold payments. The goal of bed-hold is to provide a continuous place of residence for the nursing home resident. In the absence of a bed-hold policy, some residents may refuse hospitalization to avoid loss of their bed (Nohlgren 2004). On the other hand, if the marginal profit associated with the Medicaid bed-hold payment is greater than the marginal profit associated with nursing home Medicaid payment for continued care in the nursing home, then bed-hold introduces a financial incentive to hospitalize nursing home residents. Using the Institutional Population Component of the 1987 National Medical Expenditures Survey, Freiman and Murtaugh (1993) found a positive, but statistically insignificant association between the presence of a state bed-hold policy and nursing home hospitalization. In this paper, we used national data from 2000 to analyze the association between state Medicaid policies and the probability of acute hospitalization from the nursing home setting, using multilevel multinomial response models controlling for death and for resident, facility, and market factors that may influence hospitalization.