Incentives in case-mix measures for long-term care

Several States now use patient-based payments for skilled nursing facilities and intermediate care facilities; others are in the process of developing case-mix systems. The Health Care Financing Administration is working under congressional mandate to develop a prospective case-mix system for Medicare payments to skilled nursing facilities. If new payment methods follow the existing pattern, they will be based not on the patient's clinical characteristics but rather on a mixture of clinical characteristics and services delivered. As a result, innate incentives are contained in data collection systems which are cost-increasing at best and dangerous at worst. A preferable approach would be to develop payment schemes based on the patient's degree of dependence.