Medicare's nursing-home benefit: variations in interpretation.

The use of skilled-nursing facilities by Medicare beneficiaries as measured in days of care per thousand elderly persons varies considerably from one state to another. To explore the possibility that this variation reflects differences in the administrative interpretation of rules governing coverage, we developed nine hypothetical cases and presented them by telephone to claims reviewers in fiscal intermediaries and professional standards review organizations. Cases were designed to illuminate the reviewers' use of discretion. We observed marked differences both in the reviewers' decisions to cover or not cover patients and in the reasoning behind their decisions. Three of the 18 reviewers decided to cover very few cases; almost half the reviewers decided to cover most of the cases, but not the same ones. In only two cases did the 18 reviewers approach consensus. This variation is a reflection of the complexity of Medicare's coverage rules and its decentralized administration. To reduce variation, we recommend more centralized review with oversight by Medicare's central office rather than by its 10 regional offices. This oversight should include the training of reviewers in a way that focuses on complex cases to improve the consistency of judgment.