rollees received 71% fewer home health visits than
did FFS participants after controlling for health and so-
ciodemographic characteristics (Experton, Li, Branch,
Ozminkowski, Mellon-Lacey, 1997), and (b) the odds
of preventable rehospitalization were 3.51 times as
high for Medicare MCO enrollees compared to Medi-
care FFS participants (Experton, Ozminkowski, Pearl-
man, Li & Thompson, 1999). The results of the San Di-
ego studies lend credence to the assertion that
resource targeting practices of MCOs within the nurs-
ing home setting may have significant unintended
consequences at later points along the continuum of
care for those with poorer postacute prognoses.
The present study appears to illustrate how man-
aged care financing targets the provision of rehabili-
tation services within the nursing home setting, yet it
remains only a snapshot of a larger and more compli-
cated health services continuum. It is a system made
even more potentially fragmented with the passage of
the 1997BBA provisions to reduce home health and
nursing home postacute Medicare expenditures.
Until the introduction of nursing home PPS, most
nursing homes had little experience with a payment
system that departed from retrospective reimburse-
ment for medically necessary care. Providers with
prior experience in contracted per diem reimburse-
ments for managed care patients may have an advan-
tage during PPS implementation. However, it is also
likely that cost shifting under the old FFS cost-based
reimbursement system allowed providers to be more
competitive in contracting with MCOs. One possibil-
ity is that managed care targeting practices appeared
effective in isolation in the present study to some ex-
tent because of the limited marginal benefits resulting
from the high level of rehabilitation therapy services
provided to Medicare FFS patients. The refinements
to the Medicare FFS payment system designed to re-
duce overutilization may adversely affect patients
cared for under MCO contracts if PPS-related staffing
and training changes limit opportunities for cost shift-
ing. Evaluations of PPS should be broadened to in-
vestigate possible indirect effects of the policy. Pro-
vider data on SNF rehabilitation such as the data
analyzed in this study will be valuable for such pre/
post evaluation efforts.
Future studies on this issue would benefit from joint
efforts on the part of providers and payers to coordi-
nate their management information systems so as to
track individuals across the continuum of care and
monitor health outcomes. There is need to explicitly
track MCO and FFS patients from the nursing home
to examine rates of rehospitalization and home care
utilization. Until we are able to follow Medicare FFS
and MCO enrollees across these settings, research on
this issue is likely to continue to raise more questions
than it answers in terms of the effects of reimburse-
ment mechanisms on quality of care. Data integra-
tion at the patient-encounter level is critical, given
the risks for the Medicare system and the vulnerable
population that it serves.
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