The Effect of Medicare Part B Therapy on Skilled Nursing Facility Residents

This study evaluated how a policy change in 1999, the temporary Medicare Part B therapy cap, affected the number of therapy units received by long-stay residents of nursing homes and whether the additional therapy affected their functional status. A $1500 cap on occupational therapy and a second $1500 cap on physical and speech therapy combined was in effect in 1999 and removed in 2000, thus creating a natural experiment scenario that could be exploited to evaluate the dose-response relationship between the amount of therapy and functional gain. The cap and its removal were used as an instrumental variable in a two stage least squares design. Eighty-seven payment regions and six payment rate subgroups were established to further specify the effect of the therapy cap and its removal. Therapy units increased 49% on average in 2000, or 13.72 units per patient (about 3.5 hours), with the increase varying across the payment subgroups from 37% to 51%. More patients received two or three types of therapy in 2000. The greatest increase in mean units was for patients above the 90th percentile of units received. The resource dependency theory was used to interpret the nursing homes’ response to the therapy cap. Patients in for-profit nursing homes, as well as homes with a larger proportion of Medicaid as the pay source, were more likely to provide increased therapy units in 2000. Overall, the long-stay nursing home population declined in independence in activities of daily living (ADL), with a smaller decline in 2000 that cannot be attributed to the provision of more therapy. Regression results did not show significant changes in ADL function when therapy units were predicted with the instrument. Naïve or ordinary least squares (OLS) models did not show a clinically significant change in ADL score. Stratified target groups, while receiving more therapy units than the mean, did not exhibit an improved ADL change score. Due to the limitations of the methods and assessment tool, future studies are suggested to further analyze the relationships between units of therapy and functional outcomes for Medicare Part B therapy patients who are skilled nursing facility residents.