People eligible both for Medicare and Medicaid go to lower-quality nursing homes after being hospitalized at a rate higher than Medicare-only patients, according to researchers from Brown and Harvard universities. Both government insurance programs potentially could save money — and health outcomes might improve — if the nursing home referral process is changed, they suggest.

An average dual-eligible patient is about 9 percentage points less likely than a Medicare-only patient to be discharged to a skilled nursing facility with a high nurse-to-patient ratio, the researchers determined. Duals are about 4 percentage points more likely to be admitted to a nursing home in the lowest quintile for nurse staffing. The investigators used nurse-to-patient ratio as a proxy for nursing home quality, as staffing level has been strongly linked to quality in previous research.

Bad debt likely explains this phenomenon to some extent, the authors surmised. Medicare covers 100 days of post-acute SNF care, but a co-payment kicks in after 20 days. If the resident does not pay these copayments, they become bad debt—and dual-eligible beneficiaries account for more than 90% of SNFs’ bad debt, according to American Health Care Association figures cited by the researchers. Therefore, high-quality facilities that can be choosier have an incentive to avoid dual-eligible residents.

Furthermore, SNFs might seek to focus on short-term rehabilitation patients in the 100-day Medicare window and avoid people more likely to become long-stay residents on Medicaid, which reimburses at a lower level.

Dual eligibles are more likely to become long-stay residents than Medicare-only patients, the investigators found. They tend to have more complex health conditions and are more likely to lack resources — such as a spouse or home equity — to enable non-institutional care, according to the researchers. 

However, being in a nursing home in the top 20% for nurse staffing significantly narrowed the gap between duals and Medicare-only patients, in terms of the likelihood of becoming a long-stay resident, the analysis revealed. In addition, duals’ adjusted hospitalization rates were equal to or lower than Medicare-only rates, indicating that there are “nonclinical” reasons why duals are more likely to enter extended care. So, if SNFs take less account of dual-eligible status when considering prospective residents, it could improve post-acute cost efficiencies and reduce the number of people unnecessarily in institutional long-term care.

“We conclude that changes in the current SNF care referral process have the potential to reduce excess SNF utilization by dual-eligible beneficiaries and could help reduce spending by both Medicare and Medicaid,” the authors wrote.

The investigators analyzed about 907,000 hospital patients discharged to a SNF between 2008 and 2009, of whom 19% were dual eligibles. Data came from sources such as the Minimum Data Set, Medicare enrollment and claims files, and survey information. Findings appear in Medical Care Research and Review.