By Jennifer M. McGivney
Nursing homes receive 82 cents in reimbursement for each dollar they spend to care for a Medicaid beneficiary, according to a new study conducted for the Department of Health and Human Services.
The average nursing home receives just 82 cents in reimbursement for each dollar it spends to provide daily care to a Medicaid beneficiary, according to a report published last month by the Assistant Secretary for Planning and Evaluation (ASPE) at the U.S. Department of Health and Human Services.
The study, commissioned by ASPE, was led by a research team that included faculty, staff, and graduate students from the Gerontology Institute at the University of Massachusetts (UMass) Boston.
“Greater numbers of people are retiring,” says Marc A Cohen, co-director of the LeadingAge LTSS Center @UMass Boston and research team member. “They are living longer. They are living long enough to experience long-term care need. The demand for care will increase significantly. What this (study) shows is that nursing homes are struggling financially, and it would appear to me that if you want to influence better outcomes in nursing homes, then you want to ensure proper funding.”
Researchers found that the nationwide ratio of Medicaid reimbursements to nursing home costs was .82. A payment-to-cost ratio of 1 would indicate that the amount of reimbursement received equaled the cost of care for an individual.
The study found that nursing homes with higher Medicaid payment-to-cost ratios—mostly for-profit nursing homes—had lower nursing staff levels. This finding seems to indicate that, given a fixed reimbursement rate, these nursing homes improved the payment-to-cost ratio by lowering staffing costs.
Compare this to nursing homes with lower Medicaid payment-to-cost ratios, mostly nonprofit nursing homes where the study found higher nursing staffing levels. This finding indicates that these homes supported higher staffing levels by drawing on other, more lucrative payment sources.
“This study provides a baseline for conversations around the adequacy of payment for the costs that are incurred for caring for Medicaid residents,” says Edward Alan Miller, an LTSS Center fellow, study author, and chair of the Department of Gerontology at UMass Boston. “The question is: How can we encourage efficiency while promoting sufficient access and quality in nursing homes?”
For more information about this study, read “New Study: Medicaid Reimbursements Fail to Meet Actual Costs of Caring for Medicaid Nursing Home Residents” on UMass Boston’s Gerontology Institute blog.