Impact of the Catastrophic Coverage Act and New Coverage Guidelines on Medicare Skilled Nursing Facility Use

The promulgation of new coverage guidelines and provisions of the 1988 Medicare Catastrophic Coverage Act indicated that Medicare's role in financing nursing home care could expand greatly. This paper presents a facility-level analysis addressing how the policy changes affected the payer mix of subgroups of Medicare-certified skilled nursing facilities (SNFs). Our analysis found that the new policies increased participation of nursing homes in the Medicare SNF program and suggested that the policies expanded both access to the Medicare SNF benefit and the role of public financing for nursing home care. Greater responsiveness to the policies was observed among proprietary SNFs and among those with more beds.