Friday April 2, 1999
The April issue of Provider, the American Health Care Association's nursing home trade magazine, juxtaposes two critical LTC financing problems. In one article entitled "Bill Would Allow Facilities to Withdraw from Medicaid," we learn why hard-pressed nursing facility owners are likely to bail out of the Medicaid program as authorized by the Nursing Home Resident Protection Act of 1999, signed by President Clinton on March 25. In Congressional hearings on this bill:
"Kelley Schild, administrator of the Floridean Nursing and Rehabilitation Center in Miami, Fla., testifying on behalf of the American Health Care Association, warned that more providers are likely to opt out of participating in Medicaid unless Medicaid reimbursement rates are raised to approach the real cost of providing quality care to residents.
"Schild told the congressional panel that her family-owned facility is reimbursed a flat rate of $87.04 per day for residents receiving Medicaid, while the actual costs for residents can reach as high as $133, resulting in a daily loss of $45.95 for those residents. Schild said her facility copes with the disparity between actual costs and Medicaid reimbursement rates by managing the mix of private-pay to Medicaid residents, which averages at about 45 percent private pay and 55 percent Medicaid at her facility. She told the panel that her facility has a waiting list containing both private-pay and Medicaid residents and that she considers...whether the resident will be private-pay or on Medicaid, when considering residents for admission." (Page 11)
Translation: Nursing homes can survive financially only by shifting costs from Medicaid residents to private payers. The same issue of Provider contained an article entitled "Navigating Through a Legal Storm: Wave of Litigation Catches up to Long Term Care." According to that piece: "Both the number of lawsuits brought against nursing facilities and the size of the awards stemming from those cases are rising at an incredible rate. While long term care providers face daily challenges in the form of payment pressure, regulatory burdens, and falling census, none has the potential to devastate the industry as much as the specter of tort litigation, industry leaders say." (Page 26)
Translation: Litigators are suing the pants off nursing facilities for allegedly providing deficient care.
The point: Nursing homes are caught between the rock of reimbursement and the hard place of quality care. Nationally, over two-thirds of their residents are on Medicaid, but Medicaid often pays less than the cost of providing the care. When nursing homes try to avoid Medicaid residents and attract private payers, they are attacked for discrimination. When they attempt to economize on services instead, they are sued for quality of care violations. They're damned if they do and damned if they don't!
Private long-term care insurance helps to solve this problem
by increasing the number of people who are able to pay privately
at the full private pay rate, thereby empowering nursing homes
to provide better care to all residents. Medicaid estate planning
has the opposite effect of increasing the number of Medicaid residents,
reducing the ability of nursing homes to provide quality care
to any residents, and undermining the demand for long-term care
insurance. To add injury to insult, the attorneys who litigate
against nursing homes for providing deficient care are frequently
the same ones who create the problem by artificially impoverishing
their upper-middle class clients to qualify them for the under-reimbursing