The objective of this study was to investigate the possibility that nursing homes may have reacted to the publication of the Nursing Home Compare report card by adopting cream skimming admission policies. Adoption of such policies would not only have frustrated the intent of the report cards to promote quality improvement but also have in fact led to an unintended adverse outcome by limiting access to patients who need nursing home care the most. Despite the theoretical reasons for expecting nursing homes to engage in cream skimming, we found little evidence that they do. For only two of the six cohort characteristics we examined did we find any evidence that nursing homes have begun to admit healthier patients following the publication of the report card, and even for these two characteristics, the effect is not very large.
We also found very little evidence for cream skimming in the stratified analyses. It is particularly surprising that we found no evidence for cream skimming among the high-occupancy facilities, as they were predicted to be the most likely to engage in this behavior. It is possible that due to the small sample size, we did not have sufficient power to detect a response in this group.
We should note that the measures of cream skimming that we studied are not comprehensive, and nursing homes may have changed their admission policies in ways not captured in our study. However, we did include some of the most important characteristics that determine the health status and quality of life of long-term care patients. We should also note that we did not examine admissions of post-acute patients. These are typically Medicare patients who enter the nursing home following a hospital discharge for a short (several days to several weeks) stay for rehabilitation care and then are typically discharged home. Nursing Home Compare includes specific QMs reflecting the quality of care that these patients receive. There are, therefore, incentives for cream skimming for this patient population as well. Our findings may not necessarily generalize to this patient population because the Medicare market is different and the incentives might be different. A separate study would have to address this issue in the context of post-acute care.
The largest cream skimming effect we found was with respect to pain. Unlike the other admission characteristics we examined, pain is more likely to be subject to ascertainment bias and measurement error (Morris et al., 2003
). It is, therefore, possible that the decline in the percent of admissions with pain that we found is a decline in the percent of recorded admissions with pain, rather than actual change in the type of patients being admitted. With the data we had, we are unable to rule out this possibility.
We also note that the type of study we present cannot separate out admission decisions made by nursing homes from those made by prospective patients and their families. One might wonder if the changes we observe are a reaction of consumers to the publication of the report card, rather than a cream skimming response by nursing homes. However, because we have examined aggregate changes in admission characteristics, it is likely that they reflect providers’ response. Consumers’ response is most likely to manifest itself in shifts in market shares and redistribution across nursing homes, as consumers are choosing the best among the nursing homes available to them in their local markets. It is much less likely to result in changes in the average characteristics across all nursing homes. Consumers’ response would lead to the aggregate results we observe only if (a) the published results reveal conditions in nursing homes considered to be so horrendous that patients prefer to avoid nursing home admission altogether or (b) the nursing homes with acceptable levels of quality are operating at full capacity and cannot accommodate any increase in demand and thus prospective patients who would have sought admission to these facilities prefer to stay at home. The latter is not likely as occupancies have been in the 80% range throughout the period we study.
The limited evidence for cream skimming that we observe suggests that the CMS initiative to report nursing home quality publicly has, by and large, avoided this adverse outcome to date. What might be the reasons for this and can we expect this to continue in the future? Several factors might be at play. First, financial incentives in some states may counteract the incentives to cream skim. Some state Medicaid reimbursement systems, which pay for the majority of the long-term care residents, are based on case mix, offering higher rates to nursing homes caring for sicker and frailer patients. If these rates are such that the profit margin is also higher for these patients, then nursing homes have a financial incentive to preferentially admit these patients, incentives that may overshadow the incentive to cream skim. Second, to engage in cream skimming, nursing homes have to view the report cards as very important in influencing their residual demand. A national survey conducted a year following the first publication (in 2004) found that less than 1% of nursing home administrators thought that the Nursing Home Compare report was a major factor influencing admission decisions by prospective patients (Mukamel, Spector, et al., 2007
), indicating that perhaps the report card is not viewed as having sufficient influence on residual demand to provide strong incentives to cream skim. Third, nursing homes are constrained by the supply of patients they face, both in terms of number of patients and the type of patients seeking admission. Although they may wish to admit only patients who are relatively healthy, they may be faced with a clientele composed of mostly high-severity and frail patients. The increasing availability of assisted living and home care alternatives in long-term care markets have siphoned off demand by potential low–care need residents, leaving nursing home with a population that is increasingly sicker, making it difficult to cream skim. Finally, cream skimming, especially when prospective patients are becoming more severely ill and frail, may entail the opportunity cost of forgoing admissions that result in beds being empty for prolonged periods of time while waiting for a more desirable patient. Decreasing occupancies and increased competition between nursing homes (Mukamel, Spector, et al., 2007
) increase these opportunity costs, making cream skimming less attractive. If these trends were to continue, then it is unlikely that nursing homes will revert to cream skimming strategies on a large scale in the coming years.