Medicare Advantage and Nursing Facility Quality

Background:

The percent of nursing home patients covered by MA nearly doubled from 2000 to 2013. There is evidence that highly integrated nursing home-hospital linkages have yielded better outcomes for patients, but little is known if Medicare Advantage plans establish special relationships with high quality facilities. The objective of this study is to examine the relationship between Medicare Advantage enrollment and the quality of nursing facilities at the county level.

Methods:

Data sources include 2013-2015 Medicare Advantage payment and enrollment files and Nursing Home Compare Star-Rating files (as a measure of quality) from the Center for Medicare and Medicaid Services. I first run ordinary least squares linear regression testing for the association between Medicare Advantage penetration and facility quality at the county-level. Because where managed care organizations operate is endogenous to patient risk profiles, the quality of facilities as measured by clinical outcomes (overall star-rating) may be biased by favorable selection of healthier Medicare Advantage patients. I then instrument MA penetration with county-level payment rates—an exogenous policy shock that influences Medicare Advantage enrollment to test for the association on quality. I also test the association on structural quality measure (staffing ratings) that may be less affected by patient risk profiles. I control for the number of facilities for each county in all models. Robust standard errors are clustered at the county level.

Results:

2,847 counties were included in the sample from 2013-2015. The average MA penetration was 32.8% (SD=15.2%) and the average MA payment was $757 (sd=$64) in the sample. The average number of nursing facilities in a county was 5.4 (sd=9.7). The average proportion of overall 5-star (high quality) facilities in a county was 22% (sd=29%), overall 1-star (low quality) was 13% (SD=24%), staffing 5-star was 10% (sd=21%), and staffing 1-star was 12% (sd=25%). OLS regressions indicate that a one-percentage increase in MA penetration is associated with increase in the proportion of overall low quality facilities (0.04%, p<.1) and low quality staffing facilities (0.19%, p<.01), and a decrease in the proportion of high quality staffing facilities (-0.15%, p<.01). In contrast, IV regressions suggest that a one-percentage increase in MA penetration is associated with decrease in the proportion of overall low quality facilities (-0.86%, p<.01) and low quality staffing facilities (-1.3%, p<.01). First-stage regressions suggest strong instrument (F=45.11, p<.001).

Conclusion:

Results suggest that MA plans may be operating in counties where there are also lower proportion of low quality SNFs. Further research is needed to study if MA plans concentrate their enrollees in specific (i.e. high quality) facilities to provide care. It is important to identify possible inequities in nursing home use and care as a consequence of where MA plans operate.