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Is Managed Care Effective in Long-term Care Settings? Evidence from Medicare Institutional Special Needs Plans

Author

Listed:
  • Momotazur Rahman
  • Brian McGarry
  • Elizabeth M. White
  • David C. Grabowski
  • Cyrus M. Kosar

Abstract

Nursing homes face unique financial incentives that encourage under-investment in onsite clinical capabilities and overreliance on hospitals to triage and care for residents with dementia, contributing to high levels of health care spending for this population. A proposed solution to align incentives are Institutional Special Needs Plans (I-SNPs), which combine capitated financing with plan-provided onsite clinician presence. Using 12 million resident-quarters of data from 2016-2022, we exploit the timing of nursing homes’ I-SNP contracting to instrument for plan enrollment and estimate causal effects on hospitalization and other health outcomes. We found that I-SNP enrollment reduced quarterly hospitalization rates by 3 to 4 percentage points, which equates to one third of hospitalizations relative to the sample mean. We do not find consistent evidence of an impact on other health outcomes and quality of care indicators.

Suggested Citation

  • Momotazur Rahman & Brian McGarry & Elizabeth M. White & David C. Grabowski & Cyrus M. Kosar, 2025. "Is Managed Care Effective in Long-term Care Settings? Evidence from Medicare Institutional Special Needs Plans," NBER Working Papers 34235, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34235
    Note: AG
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    References listed on IDEAS

    as
    1. Michael Geruso & Timothy Layton, 2020. "Upcoding: Evidence from Medicare on Squishy Risk Adjustment," Journal of Political Economy, University of Chicago Press, vol. 128(3), pages 984-1026.
    2. Mark Duggan & Jonathan Gruber & Boris Vabson, 2018. "The Consequences of Health Care Privatization: Evidence from Medicare Advantage Exits," American Economic Journal: Economic Policy, American Economic Association, vol. 10(1), pages 153-186, February.
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    More about this item

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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