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Medicaid Underfunds Nursing Home Care By $3.5 Billion

  • October 5th, 2001

The Medicaid program underpays nursing homes by about $3.5 billion a year, according to a new study commissioned by the American Health Care Association (AHCA). On average, the shortfall in Medicaid reimbursement exceeds $9 per day for every Medicaid patient in a nursing home.

The AHCA, which represents 12,000 long-term care providers, called the report's findings evidence of 'a worsening crisis that threatens seniors'' access to quality nursing home care, perpetuates a staffing recruitment and retention crisis reaching epidemic proportions, and shortchanges the growing needs of millions of the nation''s oldest and most vulnerable seniors.'

The independent analysis, completed by the accounting firm BDO Seidman, looked at how nursing home costs covered by Medicaid compared with actual Medicaid payments received by nursing facilities in 36 states in 1999. The findings were then extrapolated to all 50 states. Although costs exceeded payments in nearly all states, there was wide variation among the states. States with the greatest disparity between Medicaid rates and allowable Medicaid costs were New Jersey (an underpayment of $21.11 per patient per day) Vermont (a $19.95 underpayment), Connecticut (a $14.71 underpayment) and Oregon (a $13.14 underpayment). Alabama was the only state paying more in Medicaid benefits than the cost of patient care; its reimbursement of $102.78 per Medicaid patient day was $2.48 more than nursing facility costs.

Shortfalls in Medicaid reimbursements will only get worse due to escalating costs and a lack of statutory protections for adequate reimbursement rates, the study warns. Medicaid pays the costs of nursing home care for between 60 and 70 percent of nursing home patients in any given state, according to the study's authors.

For more on the study, including a downloadable copy, click here.

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Felinton Elder Law & Estate Planning Centers
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Hale Ball Carlson Baumgartner Murphy PLC
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Last Modified: 10/05/2001

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