This memo updates models of non-therapy ancillary (NTA) costs for skilled nursing facilities (SNFs) designed to improve the accuracy of Medicare payments to SNFs. Using 2007 data for SNF stays provided by CMS, we obtain estimates that are qualitatively similar to those we obtained using 2003 data. The revised models add new variables suggested by CMS and exclude variables identified as being difficult to administer. Parsimonious models are estimated that can explain up to 22 percent of cost variation. The findings suggest that a range of options are available that would greatly improve the accuracy of Medicare payments.
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