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LTC Bullet: Perils of Medicaid

Wednesday February 3, 1999


A reporter from a prestigious financial planning publication contacted the Center for Long-Term Care Financing yesterday. She asked us to provide evidence that Medicaid nursing home care can be risky for consumers. Some Medicaid planning attorneys had told her that clients they artificially impoverish to qualify for the welfare program do not experience access and quality problems. We thought our readers would appreciate seeing the same evidence of potential Medicaid-related deficiencies gleaned from the gerontological literature that we provided to the reporter. That information follows. If you need complete bibliographical references for any of the quotations cited, the information is available in "The Perils of Medicaid: A New Perspective on Public and Private Long-Term Care Financing," Center for Long-Term Care Financing, Seattle, Washington, 1997, 100+ pages, $23.95 (hard copy), $13.95 (disk) which may be ordered by contacting or by calling (206) 447-1340.



"...those most likely to have to wait for nursing home placement are those...financed by Medicaid." (GAO, 1988, p. 22)

"...there is a shortage of beds in many nursing home care markets and, under such circumstances, only private patients will have a free choice among nursing homes.... Thus, if beds are occupied in the more desirable homes, Medicaid patients could be forced to choose a home that they would not otherwise have chosen. Private patients, since homes are competing for their business, will tend to have an unconstrained choice among homes." (Nyman, June 1989, p. 210)

"Private-pay patients can usually find a nursing home bed quickly. Waiting lists for Medicaid patients (especially heavy-care patients), can stretch for several months, even a year or more. The only opening for a Medicaid patient may be in a facility that is not convenient to visitors, or
that does not provide quality care." (Shilling, 1992, p. 73)

"There is strong evidence that Medicaid eligibles face substantially lower access to nursing home services than private payers.... It is not known whether lengthy waits to enter nursing homes threaten the health and well-being of Medicaid eligibles. In any event, many are likely to be forced into care arrangements that are more expensive. Studies suggest that patients receiving long-term care in hospitals while waiting for admission to nursing homes are disproportionately Medicaid eligible." (Reschovsky, 1996, p. 16)

"Because the Medicaid approved rate of payment is lower than what the nursing home charges private pay patients, many nursing homes are reluctant to accept Medicaid patients.... Nursing homes are not supposed to discriminate against patients who go on Medicaid. However, some states do allow Medicaid patients to be assigned to a separate wing of the nursing home, or to be discharged to another nursing home if no Medicaid bed is available. If you have to receive acute care in a hospital, the nursing home will keep your Medicaid bed for you for a limited time. If this period expires, the nursing home may not readmit you." (USHC, March 1997, p. 53)



"One reason for poor quality is inadequate and poorly targeted reimbursements by Medicaid/Medicare, which forces some nursing home operators to 'cut corners' on care." (U.S. Congress, 1986, p. vi)

"Dissatisfaction with the current medicaid program is high. Not only does the demeaning means test often imply hardship for patients and their spouses, but low reimbursement rates mean that nursing homes frequently resist taking medicaid patients or provide poor care." (Rivlin and Wiener, 1988, p. 203)

"One way to interpret the current market outcomes in the nursing home sector is to say that, despite protest to the contrary, state Medicaid programs are acting effectively to buy the services they wish to purchase for Medicaid patients--a limited amount of relatively low-cost care of uncertain quality." (Bishop, 1988, p. 352)

"States' efforts to limit the number of beds to control Medicaid costs provide a protective environment for most nursing homes. Operators can have little or no fear that their occupancy will fall or that a new home will try to enter their market even if the quality of care provided is somewhat deficient." (Scanlon, 1988, p. 12)

"Facilities can attract as many Medicaid patients as needed without addressing quality, because Medicaid patients are most concerned with simply finding a bed. Accordingly, higher-quality
homes attract private pay patients, and these facilities act on their preferences for such patients by admitting them first and filling the few remaining beds with Medicaid patients." (Davis, 1991, p. 149)

"...the proportion of Medicaid recipients is indeed associated with lower levels of RN staffing and a higher proportion of residents not toileted ...higher proportions of Medicaid were found
to be associated with lower nursing home quality, suggesting that the Medicaid program in fact exercises its power to bargain for price rather than quality.... A higher proportion of residents whose care is reimbursed by Medicaid is associated with lower quality as measured by these indicators.... Residents in homes with few private-pay patients (implying more public-pay patients) were found to be 30 percent more likely to experience functional decline.... Simply raising Medicaid rates or mandating parity across payers may not provide sufficient incentives for increasing quality. Under conditions of excess Medicaid demand, there may be little incentive to provide quality at any price...." (Zinn, 1994, pps. 570, 573, 574-575)


"The escalating cost of the Medicaid program at both the federal and state levels has caused a significant 'tightening' of the program, both through legislative change and cutbacks in coverage. These changes have been heavily focused on the category of aged persons who need long-term institutional care. At the federal level this is reflected in the passage of the Medicaid portions of the Omnibus Budget Reconciliation Act of 1993 (OBRA 93). At the state level, there has been proactive elimination of Medicaid coverage. Typical items eliminated from Medicaid nursing home programs in such cutback programs have been eyeglasses, dentures, hearing aids, and
disposable adult diapers. At the present time it appears that such cutbacks will not only continue, but will include more essential items. This raises grave quality of care issues, which are important to consider when discussing Medicaid as a potential option for financing costs of long term care.... Planning only for Medicaid eligibility severely restricts options, and would not be in the best interest of many clients. For example, considerations should be given to the following possible consequences of transferring resources in an effort to meet resource eligibility require-ments: (1) Possible loss of autonomy, pride, and dignity; increase in dependence on others; (2) Inability to purchase services not available under Medicare or Medicaid; (3) Reluctance of nursing homes to admit Medicaid as opposed to 'private pay' patients; (4) Donees of transferred assets may be or become unwilling to provide financial assistance to the donor when needed; and (5) Resource depletion eliminates the option of obtaining entry to facilities that do not accept Medicaid patients." (Overman, 1995, pps. 16, 54-55)



"Medicaid definitely has its problems. No matter how hard they try, the nursing homes cannot guarantee access to quality care when Medicaid pays too little and regulates too much. The only way America can preserve and improve publicly financed long-term care is to target it narrowly toward the genuinely needy while providing ever stronger incentives for everyone else to purchase private long-term care insurance."