Skilled Nursing Facilities: Available Data Show Average Nursing  
Staff Time Changed Little after Medicare Payment Increase	 
(13-NOV-02, GAO-03-176).					 
                                                                 
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. 				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-176 					        
    ACCNO:   A05507						        
  TITLE:     Skilled Nursing Facilities: Available Data Show Average  
Nursing Staff Time Changed Little after Medicare Payment Increase
     DATE:   11/13/2002 
  SUBJECT:   Health care costs					 
	     Health care services				 
	     Managed health care				 
	     Medical services rates				 
	     Skilled nursing facilities 			 
	     Health care personnel				 
	     Personnel management				 
	     Medicare Program					 
	     CMS Online Survey Certification and		 
	     Reporting System					 
                                                                 

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GAO-03-176

GAO Report to Congressional Committees

November 2002 SKILLED NURSING FACILITIES Available Data Show Average
Nursing Staff Time Changed Little after Medicare Payment Increase

GAO- 03- 176

Page i GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities Letter 1
Results in Brief 3

Background 5 SNF Staffing Changed Little after Payment Increase Took
Effect 9 Conclusions 15 Matter for Congressional Consideration 15 Agency
Comments and Our Evaluation 15

Appendix I Data Source and Data Verification Methods for Nurse Staffing
Ratio Analysis 21

Appendix II Average Change in Nursing Staff Time between 2000 and 2001,
Grouped by Category of SNF 29

Appendix III Comments from the Centers for Medicare & Medicaid Services 30

Appendix IV GAO Contacts and Staff Acknowledgments 31

Related GAO Products 32

Tables

Table 1: Average SNF Staffing Time by Type of Nurse, 2000 and 2001 11
Table 2: Average Change in Nursing Time between 2000 and 2001 for
Freestanding SNFs, Grouped by Medicare Patient

Share 12 Table 3: Average Change in Nursing Time between 2000 and 2001 for
Freestanding SNFs, Grouped by Total Margin 13

Table 4: Average Change in Nursing Time between 2000 and 2001 for
Freestanding SNFs, Grouped by 2000 Staffing Ratios 14 Table 5: Creation of
Our Sample of SNFs 24 Contents

Page ii GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

Table 6: Distribution of SNFs across States (in Percentages) 24 Table 7:
Exclusions from the Sample 27

Abbreviations

AAHSA American Association of Homes and Services for the Aging AHCA
American Health Care Association AHA American Hospital Association BBA
Balanced Budget Act of 1997 BLS Bureau of Labor Statistics BBRA Medicare,
Medicaid, and SCHIP Balanced Budget

Refinement Act of 1999 BIPA Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000

CMS Centers for Medicare & Medicaid Services CNA certified nurse aide FTE
full- time equivalent HCFA Health Care Financing Administration LPN
licensed practical nurse

LVN licensed vocational nurse OSCAR Online Survey Certification and
Reporting System PPS prospective payment system RN registered nurse

RUG resource utilization group SNF skilled nursing facility

Page 1 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

November 13, 2002 The Honorable Max Baucus Chairman The Honorable Charles
E. Grassley Ranking Minority Member Committee on Finance United States
Senate

The Honorable William M. Thomas Chairman The Honorable Charles B. Rangel
Ranking Minority Member Committee on Ways and Means House of
Representatives

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. 1
The Congress, through the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (BIPA), 2 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,

1 The nursing component includes costs related not only to nursing but to
medical social services and nontherapy ancillary services, such as drugs,
laboratory tests, and imaging. The therapy component includes costs
related to occupational, physical, and speech

therapy. The routine cost component includes costs for capital,
maintenance, and food. 2 Pub. L. No. 106- 554, App. F, S: 312( a), 114
Stat. 2763, 2763A- 498.

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

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. 3 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. 4 Specifically,
this report examines whether nurse staffing ratios 5 *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), 6 maintained by the Centers for Medicare &
Medicaid Services (CMS), 7 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

3 Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999,
Pub. L. No. 106- 113, App. F, S: 101, 113 Stat. 1501, 1501A- 324. 4 BIPA
S: 312( b).

5 A nurse staffing ratio is defined as nursing hours per patient per day.
Nursing staff include registered nurses, licensed practical nurses, and
aides. In this report, *staffing* refers to these nursing staff.

6 OSCAR stores data collected during annual inspections or surveys of SNFs
conducted by state agencies under contract to CMS. OSCAR is the only
uniform data source that contains data on both patients and nursing staff.
7 CMS administers the Medicare program. On July 1, 2001, the Secretary of
Health and Human Services changed the name of the Health Care Financing
Administration (HCFA) to CMS. In this report, we will continue to refer to
HCFA where our findings apply to the

organizational structure and operations associated with that name.

Page 3 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

accuracy of the OSCAR data, we identified over 500 SNFs in our sample that
had apparent data entry or other data reporting errors, 8 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 9 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. Our
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 rate 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.
There was a small shift in the mix of nursing time that SNFs provided,
with slightly less registered nurse (RN) time coupled with slightly more
licensed practical nurse (LPN) and nurse aide time. For most types of

8 CMS officials have stated that OSCAR data are accurate in the aggregate*
that is, at national and state levels* but have indicated that data on
some individual facilities may not be accurate. We report OSCAR data only
at national and state levels. See HCFA, Report to Congress:
Appropriateness of Minimum Nurse Staffing Ratios in Nursing Homes, Phase I
(Baltimore, Md.: July 2000).

9 Our 2001 OSCAR data include May through December 2001, after the payment
increase took effect. As a result, we only reviewed data for an 8- month
period after the payment increase was implemented. We were not able to
review data for a later period when facilities might have used the payment
increase differently. Results in Brief

Page 4 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

SNFs, increases in staffing ratios were small. Further, we 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 total
revenues considerably in excess of costs before the added payments took
effect did not increase their staffing substantially more than others.
Although facilities with relatively low staffing ratios in 2000 increased
their staffing ratios in 2001, highly staffed SNFs decreased their
staffing ratios. We observed a similar pattern of staffing changes between
1999 and 2000, before the increased nursing component payment was
implemented. This indicates that the nursing component payment increase
was likely not a factor in the added nursing time among lower- staffed
facilities. However, unlike most facilities, SNFs in four states increased
their staffing by 15 to 27 minutes per patient day; three of these states*
Arkansas, North Dakota, and Oklahoma* had made Medicaid payment or policy
changes aimed at

raising or maintaining facilities* nursing staff. 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.

In written comments on a draft of this report, CMS stated that our
findings are consistent with its expectations as well as its understanding
of other research in this area. Industry representatives provided oral
comments in response to a draft of this report. Saying that our statements
were too strong given the limitations of the study, they objected to our
conclusions and matter for congressional consideration in the draft
report. In conducting our study, we recognized the limitations of the data
and the analyses we could perform and, when possible, performed tests to
determine whether they affected our results. Taking account of these tests
as well as the consistency of our results, we determined that the evidence
was sufficient to conclude that the increased payment did not result in
higher nursing staff time. However, we modified our conclusions to
reiterate the limitations of our study. We rephrased the matter for
congressional consideration to reflect the fact that the increase has
lapsed since we drafted this report.

Page 5 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

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. 10 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. 11 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. 12 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. 13 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. 14 Under the PPS, SNFs receive a daily payment that covers
almost all services provided to Medicare beneficiaries during a SNF stay,

10 A spell of illness is a period that begins when a Medicare beneficiary
is admitted to a hospital and ends when a beneficiary has not been an
inpatient of a hospital or SNF for 60 consecutive days. A beneficiary may
have more than one spell of illness per year that is

covered by Medicare. 11 CMS considers a facility to be hospital- based if
it is *under the administrative control of a hospital.* 12 Government-
owned facilities are operated primarily by counties or cities. 13 State
agencies, under contract to CMS, conduct initial and follow- up visits to
assess

compliance with federal standards* Medicare*s and Medicaid*s conditions of
participation. 14 Pub. L. No. 105- 33, S: 4432, 111 Stat. 251, 414.
Background

Medicare Payment for SNF Care

Page 6 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

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). 15 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. 16 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. 17 BBRA also increased the daily rate for all
RUGs by 4 percent for fiscal years 2001 and 2002. 18 BIPA upped the daily
payment rates by 6.7 percent for 14 RUGs, effective April 2001. 19 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
15 These groups are based on patient clinical condition, functional
status, and use or expected use of certain types of services. Each RUG
describes patients with similar care needs and has a corresponding payment
rate. 16 These figures are for facilities in urban areas. For facilities
in rural areas, the nursing component ranged from 23 percent to 72 percent
of the total rate. 17 Pub. L. No. 106- 113, App. F, S: 101, 113 Stat.
1501, 1501A- 324.

18 The 4 percent increase is based on the PPS daily rates that would have
been in effect for those years without the 20 percent temporary increase
for the 15 high- cost RUGs noted above.

19 BIPA S: 314.

Page 7 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

and applying those funds to all 14 rehabilitation RUGs. 20 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. 21 In providing care to their patients,
SNFs employ over 850,000 licensed

nurses and nurse aides nationwide. 22 Licensed nurses include RNs and
LPNs. 23 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. 24 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. 25 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

20 The remaining 12 RUGs retained the 20 percent increase. 21 BIPA
requires that CMS submit a report to the Congress on possible alternatives
to the current RUG patient classification system by January 1, 2005. BIPA
S: 311( e). 22 This figure represents the number of full- time
equivalents. 23 In some parts of the United States, LPNs are known as
licensed vocational nurses (LVN). 24 See U. S. General Accounting Office,
Nursing Homes: Quality of Care More Related to

Staffing than Spending, GAO- 02- 431R (Washington, D. C.: June 13, 2002);
Centers for Medicare & Medicaid Services, Report to Congress:
Appropriateness of Minimum Nurse Staffing Ratios in Nursing Homes, Phase
II Final Report (Baltimore, Md.: December

2001); U. S. Department of Health and Human Services, Quality of Care in
Nursing Homes: An Overview, Office of Inspector General (Washington, D.
C.: March 1999); and Institute of Medicine, Nursing Staff in Hospitals and
Nursing Homes: Is it Adequate? (Washington, D. C.: National Academy Press,
1996). 25 42 U. S. C. S: 1395i- 3( b) (2000). SNF Staffing

Page 8 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

coverage per day. 26 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. 27 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. 28 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,

26 42 C. F. R. S: 483.30 (2001). 27 The Department of Health and Human
Services may waive the requirement that a SNF provide the services of an
RN for 8 hours a day, 7 days a week, including a director of nursing, in
certain circumstances. However, according to CMS, few facilities have
those requirements waived.

28 See U. S. General Accounting Office, Nursing Workforce: Emerging Nurse
Shortages Due to Multiple Factors, GAO- 01- 944 (Washington, D. C.: July
10, 2001), and Centers for Medicare & Medicaid Services, Report to
Congress: Appropriateness of Minimum Nurse Staffing Ratios in Nursing
Homes, Phase II Final Report, ch. 4.

Page 9 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

nursing homes have had difficulty recruiting and retaining staff. The
American Health Care Association (AHCA) 29 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. 30 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. 31 Industry officials, citing a
survey they commissioned, told us that wages have risen more rapidly since
2000. 32 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.

29 AHCA represents for- profit and not- for- profit nursing facilities. 30
American Health Care Association, Results of the 2001 AHCA Nursing
Position Vacancy and Turnover Survey (Washington, D. C.: Feb. 7, 2002). 31
These figures are based on data from BLS*s Occupational Employment
Statistics and National Compensation Survey for 1999 and 2000. BLS*s 2001
Occupational Employment Statistics were not available at the time of our
analysis.

32 The 2001 Nursing Facility Compensation Survey, sponsored by AHCA and
the Alliance for Quality Nursing Home Care, was conducted by Muse and
Associates and Buck Consultants. SNF Staffing Changed Little after Payment

Increase Took Effect

Page 10 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

No substantial change in SNFs* overall staffing ratios occurred after the
nursing component payment was increased. Between 2000 and 2001, 33 SNFs*
average amount of nursing time changed little, remaining slightly

under 3 and one- half hours per patient day. 34 Although there was an
increase of 1. 9 minutes per patient day, it was not statistically
significant. 35 (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. 36 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. 33 The 2001 data are
from May through December 2001, after the increased nursing

component payment took effect. 34 These staffing ratios, and the ratios
presented throughout this report, are based on SNFs* overall direct care
nursing staff and the total number of patients; they are, therefore,
facilitywide staffing ratios, rather than ratios specific to Medicare
patients. 35 That is, the change was too small to be statistically
distinguished from zero. Since we

were only able to review data for a limited period after the payment
increase was implemented, we compared SNFs* staffing ratio changes over
time to test whether this affected our results. When we compared the
change in staffing ratios among facilities surveyed soon after the payment
increase to those surveyed later in 2001, we found no significant
difference. This suggests that our results were not affected by examining
staffing soon after the payment change. SNFs responded similarly to the
increase regardless of how much time had elapsed since its implementation.

36 The estimates ranged from 9. 4 to 10.1 minutes, depending on whether we
assumed relatively large* 10 percent* or small* 3 percent* increases in
wage rates from 2000 to 2001. SNF Staffing Changed

Little after Payment Increase, Though Mix of Staffing Shifted Somewhat

Page 11 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

Table 1: Average SNF Staffing Time by Type of Nurse, 2000 and 2001 Average
nursing time per patient day Nursing staff Calendar year 2000 May -
December 2001

Change in minutes a RNs 30.0 minutes 28.3 minutes -1.7 minutes

LPNs b 42.9 minutes 43.6 minutes 0.7 minutes Aides c 2 hours, 10.0 minutes
2 hours, 12.9 minutes 2.9 minutes Total 3 hours, 22.9 minutes 3 hours,
24.8 minutes 1.9 minutes

Note: Data include freestanding and hospital- based SNFs. a For each
category of nursing staff, the change in minutes was significant at the
.05 level. The total

change in nursing time, however, was not significant. b LPNs are also
known as LVNs.

c Aides include certified nurse aides, nurse aides in training, and
medication aides/ technicians. Source: GAO analysis of CMS*s OSCAR data.

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-
forprofit, 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 37
increased their nursing time by 1.3 minutes per patient day* less than
SNFs with

37 For this analysis, we consider patients to be Medicare- covered if they
are receiving Medicare- covered SNF care. Although a SNF may have a large
number of patients who are Medicare beneficiaries, not all such patients
necessarily receive Medicare- covered SNF

care. For example, patients receiving long- term custodial care could be
eligible for Medicare- covered services, but their SNF stays would not be
paid for by Medicare.

Page 12 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

somewhat smaller shares of Medicare patients, and not substantially more
than SNFs with the smallest share of Medicare patients. 38 (See table 2.)

Table 2: Average Change in Nursing Time between 2000 and 2001 for
Freestanding SNFs, Grouped by Medicare Patient Share

Medicare patient share in 2000 (percentage) a Change in minutes of nursing
time per patient day b

Less than 3.8 0.8 minutes 3.8 to 7.1 3.6 minutes 7.2 to 11.4 2.9 minutes
11.5 and higher 1.3 minutes

Note: The 2001 data are from May through December 2001, after the nursing
component payment increase took effect. a The four groups of SNFs are
roughly equal in size. b Between any two groups of SNFs (rows), there were
no statistically significant differences in the

change in minutes. For the two middle groups of SNFs, the change in
minutes between 2000 and 2001 was significant at the .05 level.

Source: GAO analysis of CMS*s OSCAR data.

Similarly, SNFs* financial status was not an important factor affecting
changes in nursing time. Although SNFs with higher total margins in 2000
39 *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.)

38 The average staffing levels in 2000 were similar for the groups with
the highest and lowest Medicare patient shares* 3 hours, 11 minutes of
nursing time per patient day for the highest group, and 3 hours, 8 minutes
for the lowest group.

39 A margin is the difference between revenues and costs, divided by
revenues, and expressed as a percentage.

Page 13 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

Table 3: Average Change in Nursing Time between 2000 and 2001 for
Freestanding SNFs, Grouped by Total Margin

Total margins in 2000 (range) a Change in minutes of nursing time per
patient day b

Less than -3.4 2.1 minutes -3.4 to 2.2 2.9 minutes 2.3 to 7.4 4.2 minutes
7.5 and higher 3.7 minutes

Note: The 2001 data are from May through December 2001, after the nursing
component payment increase took effect. a Total margins are expressed as
percentages and are based on a SNF*s cost reporting year, which

corresponds to its fiscal year that begins during the federal fiscal year.
The four groups of SNFs are roughly equal in size. b Between any two
groups of SNFs (rows), there were no statistically significant differences
in the

change in minutes. For each group of SNFs, however, the change in minutes
between 2000 and 2001 was significant at the .05 level, except for the
lowest group (with total margins less than *3.4 percent).

Source: GAO analysis of CMS*s OSCAR data and 2000 Medicare cost reports.

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.
40 (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. 41 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

40 When we looked at median changes in staffing rather than average
changes, we found that these SNFs had a median increase of 13.6 minutes of
nursing time. 41 These SNFs had a median decrease of 11 minutes. Lower-
Staffed SNFs Added

More Nursing Time, but the Increased Medicare Nursing Payment Likely Was
Not the Cause

Page 14 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

minutes per patient day in 2000, while high- staffed facilities decreased
their staffing by 19.8 minutes. 42 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.

Table 4: Average Change in Nursing Time between 2000 and 2001 for
Freestanding SNFs, Grouped by 2000 Staffing Ratios a Staffing ratio in
2000 (range) a Change in minutes of nursing time

per patient day b

Less than 2 hours, 42 minutes 18.9 minutes 2 hours, 42 minutes to 3 hours,
1 minute

7.6 minutes 3 hours, 2 minutes to 3 hours, 25 minutes

0.9 minutes 3 hours, 26 minutes and higher - 17.7 minutes Note: The 2001
data are from May through December 2001, after the nursing component
payment increase took effect. a The four groups of SNFs are roughly equal
in size. b Between any two groups of SNFs (rows) the differences in the
changes in minutes were statistically

significant. For each group of SNFs, except the group with 3 hours, 2
minutes to 3 hours, 25 minutes of nursing time, the change in minutes was
significant at the .05 level. Source: GAO analysis of CMS*s OSCAR data.

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. 43 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

42 This pattern appears to reflect a common statistical phenomenon in
which high and low values tend to move closer to the average over time. 43
Our sample included 30 percent of the facilities in Arkansas, 38 percent
of the facilities in Nebraska, 62 percent of the facilities in North
Dakota, and 16 percent of the facilities in Oklahoma. SNFs in four other
states had staffing increases of 15 minutes or more, but those changes
were not statistically significant. In Several States, Staffing Ratios
Rose Substantially

Page 15 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

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
Conclusions

Matter for Congressional Consideration

Agency Comments and Our Evaluation

CMS

Page 16 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

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 Medicarecovered
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
Industry Associations

Page 17 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

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 Our
Response

Page 18 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

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. 44 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. 45 Moreover, unless

44 See HCFA, Report to Congress: Appropriateness of Minimum Nurse Staffing
Ratios in Nursing Homes, Phase I. HCFA*s analysis was based in part on
data from a special survey of payroll records from facilities in Ohio. 45
See Medicare Payment Advisory Commission, Report to the Congress: Medicare
Payment Policy (Washington, D. C.: March 2001).

Page 19 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

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. 46
46 See HCFA, Report to Congress: Appropriateness of Minimum Nurse Staffing
Ratios in

Nursing Homes, Phase I and CMS, Report to Congress: Appropriateness of
Minimum Nurse Staffing Ratios in Nursing Homes, Phase II Final Report.

Page 20 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

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.

Laura A. Dummit Director, Health Care* Medicare Payment Issues

Appendix I: Data Source and Data Verification Methods for Nurse Staffing
Ratio Analysis Page 21 GAO- 03- 176 Nursing Staff in Skilled Nursing
Facilities

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. 1 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

1 See CMS, Report to Congress: Appropriateness of Minimum Nurse Staffing
Ratios in Nursing Homes, Phase II Final Report (Baltimore, Md.: December
2001). Appendix I: Data Source and Data

Verification Methods for Nurse Staffing Ratio Analysis

Data Sources Considered

Appendix I: Data Source and Data Verification Methods for Nurse Staffing
Ratio Analysis Page 22 GAO- 03- 176 Nursing Staff in Skilled Nursing
Facilities

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, 2 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. 3 However, the agency*s recent analysis has
concluded that the OSCARbased

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.

2 In addition to the standard survey, state agencies conduct other surveys
including complaint surveys. 3 See HCFA, Report to Congress:
Appropriateness of Minimum Nurse Staffing Ratios in Nursing Homes, Phase I
(Baltimore, Md.: July 2000). OSCAR Data

Appendix I: Data Source and Data Verification Methods for Nurse Staffing
Ratio Analysis Page 23 GAO- 03- 176 Nursing Staff in Skilled Nursing
Facilities

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. 4 We were not
able to review data for a later period when facilities might have used the
payment increase differently. 5 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. 6 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

4 To test whether our results reflected any seasonal trends in staffing,
we examined the change in nurse staffing ratios among facilities surveyed
from May through December of both 2000 and 2001. We found that these
facilities had a small change in their nurse staffing ratios that was
similar to the change among facilities that were surveyed at any time
during calendar year 2000 and from May to December 2001. 5 Although the
payment increase began with services furnished on or after April 1, 2001,
according to CMS, facilities would not have begun to receive the added
payments until May 1, 2001, because of the time it takes to process
claims. We compared the change in staffing ratios among facilities
surveyed in May and June 2001 to those surveyed in July and August 2001
and found no significant difference. This suggests that the results were
not affected by

examining staffing soon after the payment change. 6 We compared the change
in staffing ratios among SNFs surveyed from May through August 2001 to the
change among those surveyed later in the year* the period for which state
agencies had not yet entered all survey data into OSCAR* and found no
significant difference. Limitations to Our Analysis

Creation of the Sample

Appendix I: Data Source and Data Verification Methods for Nurse Staffing
Ratio Analysis Page 24 GAO- 03- 176 Nursing Staff in Skilled Nursing
Facilities

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.

Table 5: Creation of Our Sample of SNFs Number of SNFs

Total SNFs in 2000 OSCAR file (no duplicates) 13,454 Total SNFs in 2001
OSCAR file 14,760 SNFs surveyed from May 2001 through December 2001 6,775

SNFs also with survey in calendar year 2000 6,522 SNFs that had received
Medicare payments not determined under the PPS -449 Original sample 6,073

Source: GAO analysis of CMS*s OSCAR data and Medicare claims data.

Table 6: Distribution of SNFs across States (in Percentages) All SNFs with
OSCAR data in calendar year 2000 (n= 13,454)

Sample SNFs a (n= 6, 522)

Alabama 1.34 1.84 Alaska 0.10 0.08 Arizona 0.99 0.86 Arkansas 1.40 1.15
California 7.50 7.65 Colorado 1.32 1.27 Connecticut 1.77 2.02 Delaware
0.27 0.28 District of Columbia 0.13 0.11 Florida 5.01 5.24 Georgia 2.19
2.81 Hawaii 0.27 0.25 Idaho 0.54 0.69 Illinois 4.60 4.35 Indiana 3.43 3.77
Iowa 2.00 2.18 Kansas 1.86 1.59

Appendix I: Data Source and Data Verification Methods for Nurse Staffing
Ratio Analysis Page 25 GAO- 03- 176 Nursing Staff in Skilled Nursing
Facilities

All SNFs with OSCAR data in calendar year 2000 (n= 13,454)

Sample SNFs a (n= 6, 522)

Kentucky 2.01 2.13 Louisiana 1.79 1.79 Maine 0.85 0.95 Maryland 1.68 0.61
Massachusetts 3.20 2.59 Michigan 2.80 3.51 Minnesota 2.75 2.81 Mississippi
0.97 1.18 Missouri 3.26 2.61 Montana 0.65 0.58 Nebraska 1.05 1.23 Nevada
0.33 0.21 New Hampshire 0.38 0.32 New Jersey 2.42 1.98 New Mexico 0.46
0.43 New York 4.39 3.31 North Carolina 2.83 3.13 North Dakota 0.63 0.81
Ohio 5.72 5.80 Oklahoma 1.46 0.52 Oregon 0.88 1.07 Pennsylvania 5.34 5.78
Rhode Island 0.62 0.64 South Carolina 1.22 1.29 South Dakota 0.64 0.66
Tennessee 1.84 1.98 Texas 7.20 7.41 Utah 0.57 0.74 Vermont 0.28 0.31
Virginia 1.61 1.72 Washington 1.86 2.12 West Virginia 0.81 0.37 Wisconsin
2.53 3.01 Wyoming 0.24 0.26

Note: These percentages do not add to 100 because we did not include the
small percentage of SNFs located in Puerto Rico, Guam, and the United
States Virgin Islands. a The sample includes all SNFs with OSCAR data for
both calendar year 2000 and May to December

2001. Source: GAO analysis of CMS*s OSCAR data.

Appendix I: Data Source and Data Verification Methods for Nurse Staffing
Ratio Analysis Page 26 GAO- 03- 176 Nursing Staff in Skilled Nursing
Facilities

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. 7 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. 8 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.) 7 These rules
identified facilities that reported more patients than beds, 12 or more
hours of nursing time per patient day, less than 30 minutes of nursing
time per patient day, and any hours coded as *999** which could indicate
reporting error. Other researchers who use

OSCAR data have developed similar decision rules. Although we also
initially used a CMS rule to identify facilities that had no staff
registered nurse (RN) hours but 60 or more beds, we did not exclude
facilities based on this rule because we later determined it was not a
good indicator of problem data. After reviewing the federal SNF staffing
regulations and

discussing these requirements with a number of SNFs, we determined that a
SNF could have 60 or more beds and have no RNs except for administrative
staff. 42 C. F. R . S: 483. 23 (2001). 8 Facilities are instructed to
report only patients in certified beds. As a result, the number of
patients reported in OSCAR for these facilities may not truly reflect the
number of patients who received care from nursing staff. Validating and
Correcting

OSCAR Data

Appendix I: Data Source and Data Verification Methods for Nurse Staffing
Ratio Analysis Page 27 GAO- 03- 176 Nursing Staff in Skilled Nursing
Facilities

Table 7: Exclusions from the Sample Number of SNFs

Original sample 6,073 Facilities with edited data that were still
identified as outliers 12 Facilities for which we could not correct the
data 35 Facilities that had closed 3 Facilities with more total beds than
certified beds 915 a Facilities for which we did not receive forms 34
Facilities that we were unable to call 81 Facilities that did not reply 12
Final sample 4,981 a These SNFs were excluded because they may have
inaccurate staffing ratios. Facilities are instructed to report only
patients in certified beds. As a result, the number of patients reported
in OSCAR for these facilities may not reflect the number of patients who
received care from nursing staff.

Source: GAO analysis of CMS*s OSCAR data.

We calculated nurse staffing ratios* hours per patient day* for each
facility by dividing the total nursing hours 9 by the estimated number of
patient days. 10 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

9 Total nursing hours includes the number of full- time, part- time, and
contract RN, licensed practical nurse (LPN), certified nurse aide (CNA),
CNA- in- training, and medication technician hours reported in OSCAR for a
2- week period. Nursing hours do not include RN directors of nursing or
nurses with administrative duties. In addition, nursing hours reflect

the amount of time that nursing staff were at work, but do not necessarily
reflect the time they spent with patients. For example, they may spend a
portion of their day in training or on breaks. 10 We estimated patient
days by multiplying by 14 the number of patients reported in OSCAR

for 1 day. Nurse Staffing Ratios

Appendix I: Data Source and Data Verification Methods for Nurse Staffing
Ratio Analysis Page 28 GAO- 03- 176 Nursing Staff in Skilled Nursing
Facilities

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.

Appendix II: Average Change in Nursing Staff Time between 2000 and 2001,
Grouped by Category of SNF

Page 29 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

Average nursing time per patient day Category Calendar year 2000 May-
December 2001 Change in minutes

Hospital- based 5 hours, 32.1 minutes 5 hours, 32.0 minutes -0.1 minutes
Freestanding 3 hours, 6.7 minutes 3 hours, 8.9 minutes 2.1 minutes

For- profit 3 hours, 8.3 minutes 3 hours, 9.5 minutes 1.3 minutes Not-
for- profit 3 hours, 51.9 minutes 3 hours, 54.6 minutes 2.7 minutes
Government 3 hours, 53.8 minutes 3 hours, 58.9 minutes 5.0 minutes

Chain 3 hours, 14.9 minutes 3 hours, 15.4 minutes 0.5 minutes Nonchain 3
hours, 34.7 minutes 3 hours, 38.6 minutes 3.9 minutes

Note: For freestanding and nonchain SNFs, the change in minutes between
2000 and 2001 was significant at the .05 level. Due to rounding, the
reported change in minutes does not always match the 2000 and 2001 figures
exactly.

Source: GAO analysis of CMS*s OSCAR data.

Appendix II: Average Change in Nursing Staff Time between 2000 and 2001,
Grouped by Category of SNF

Appendix III: Comments from the Centers for Medicare & Medicaid Services

Page 30 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

Appendix III: Comments from the Centers for Medicare & Medicaid Services

Appendix IV: GAO Contacts and Staff Acknowledgments

Page 31 GAO- 03- 176 Nursing Staff in Skilled Nursing Facilities

Jonathan Ratner, (202) 512- 7107 Phyllis Thorburn, (202) 512- 7012

Major contributors to this report were Robin Burke, Jessica Farb, and Dae
Park. Appendix IV: GAO Contacts and Staff

Acknowledgments GAO Contacts Acknowledgments

Related GAO Products Page 32 GAO- 03- 176 Nursing Staff in Skilled Nursing
Facilities

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. Related GAO Products

(290144)

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