Nursing Home Bleed As Medicare suffers budget cuts, will aging America feel the pain?

In 1998, nursing homes faced tough decisions when a prospective payment system and cuts in Medicare from the Balanced Budget Act came into effect. Nursing homes dependent on Medicare started going bankrupt, even after Congress gave back some funding, said Tamara Hodlewsky, Royster Fellow and doctoral student in the Department of Health Policy and Administration at UNC’s School of Public Health. This year, Congress allowed the Medicare “givebacks” to expire, as a bill to reinstate them has been hung up in the Senate.

Meanwhile, lobbyists, politicians and researchers, including graduate students like Hodlewsky, jumped at the chance to enter a public policy debate that affects all Americans. “With the aging in the copy population,” Hodlewsky said, “there’s a great demand for studying issues of aging and long-term care.”

In 2001, Hodlewsky and several other students teamed up with two high-profile professors in the Department of Health Policy and Administration to assess how lower and fixed daily payments were affecting the quality of care at nursing homes. William Roper is dean of the School of Public Health and former head of the federal agency that administers Medicare and Medicaid. Kerry Kilpatrick is chairman of the Department of Health Policy and Administration. Together, they scrutinized whether the new payment system affected staffing at nursing homes.

About two-thirds of nursing home patients are on Medicaid, Hodlewsky explains, but because of the extremely low payments — around $100 a day — many nursing homes make up the difference with Medicare. In addition to steep rate cuts, the new prospective payment system for Medicare also uses fixed, daily payments — the amount depending on the severity of illness. These changes create an ambiguous incentive to minimize costs, Hodlewsky said. “The good side is that it contributes to cost containment,” she said. “The bad side is it might create an incentive to decrease quality.”

The researchers found a troubling trend. The nursing homes that relied heavily on Medicare were cutting skilled nurses from their staffs. Roper shared their conclusions in a press conference in the Senate office building in 2002.

Besides some exposure to an important policy debate, the study gave Hodlewsky the chance to test a research design she would use for her dissertation. Quarterly health reports on every resident of every nursing home had become available, tracking health problems that are associated with less-consistent care. Hodlewsky looked at long-term data for five states, a total of 2.4 million patient observations, sometimes taking 12 hours to run a statistical program.

In her data analysis, Hodlewsky found that bedsores, urinary tract infections, unexpected weight loss and fractures are on the rise. The magnitude of these problems roughly increased with the percentage of Medicare patients at nursing homes. "Medicare rates do matter," Hodlewsy said. "I think [the data] show that these rate cuts have really hurt quality of care in nursing homes."

With so much data to back her up, her conclusions are nearly irrefutable. "Hodlewsky has done path-breaking work that clearly links the quality of care in nursing homes to the payments they receive for their services," Roper said.

Because of Hodlewsky's extensive publishing experience, long-standing interest in aging and future career potential, the UNC Institute on Aging awarded her the first Gordon H. DeFriese Career Development in Aging Research Award in 2002. "It is unusual to have a Ph.D. student with such extensive research experience prior to graduation," said Edward Norton, Hodlewsky's adviser and an associate professor in health policy and administration.

Hodlewsky's interest in long-term healthcare began in 1995 while working for the American Health Care Association, a nonprofit federation that represents 12,000 nursing homes and assisted-living facilities. For five years Hodlewsky worked on national surveys, assessed the impact of industry regulations and learned to measure quality in healthcare. She thought she hit a credibility ceiling, and decided to pursue further study in health policy at UNC.

Hodlewsky said it was hard to consider entering a doctoral program and moving from Washington, D.C., in her mid-30s, but the Royster Fellowship made her decision easier. "It was a better opportunity than anywhere else that had accepted me," she said. She received a five-year fellowship, but the funding will enable her to complete the degree in just four years. In addition, the monthly meetings with Royster Fellows in multiple disciplines "help me keep a wider perspective on what I do," Hodlewsky said.

Photo by Will Owens

Tamara Hodlewsky, Royster Fellow and recipient of UNC's DeFriese Career Development in Aging Research Award, wants her research to advance the public policy debate in long-term care.

Supportive faculty mentors and numerous opportunities to publish also made her decision to come to UNC the right one, Hodlewsky said. "They've been incredibly supportive, interested in what I'm doing and very generous with their time and advice."

Roper said Hodlewsky in turn has achieved her research goal of policy relevance. "We all have a stake in having high-quality, long-term care services available in sufficient quantity for us all," he said. "Tamara's work has already advanced the public policy debate that is necessary for us to make this progress."

Hodlewsky said she hopes her dissertation will aid policymakers in deciding whether to reinstate Medicare givebacks, but keeping payments at their current level is just the minimum goal. Using Medicare to make up for Medicaid is like slapping a bandage on a broken bone. "I think we need a whole new system for financing long-term care," Hodlewsky said. Perhaps future research of students like her will help achieve that result.

- Brandee Hayhurst

© 2003, The Graduate School, The University of North Carolina at Chapel Hill
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