Bullet: How Medicaid Short Changes
LTC Providers, Insurers and Patients
Tuesday, June 6, 2006
LTC Comment: Medicaid
financing of long-term care does far more damage than meets the eye and to
everyone involved. Details after
TODAY'S LTC BULLET IS SPONSORED BY MARILEE DRISCOLL, a speaker and consultant
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*** STEVE MOSES SAYS:
"I've been called a lot of things.
The Lone Ranger of Long-Term Care for one. An occasional reference to Paul Revere also comes to mind.
But maybe the allusion most often has been to Don Quixote tilting
hopelessly at the illusive windmills of long-term care public policy.
That's why the cartoon you can find and download at http://www.ltcmonth.com/images/QuixoteWEB.pdf
is a welcome turnabout. It suggests
that the DQ of LTC finally nailed one of those windmills, to wit, Medicaid
loopholes closed by the Deficit Reduction Act.
To clarify, however, it wouldn't have happened without the hard work of
many other people, especially my co-founder of the Center for Long-Term Care
Financing, and the current Chief Health Counsel for the U.S. House Energy and
Commerce Committee, David Rosenfeld. But
that's where the analogy falls apart because David is no Sancho Panza, rather a
full-fledged crusader in his own right for rational LTC policy." ***
*** LTC ICON #1: Read
this first in a series of biographical profiles of people in the field of
long-term care at http://www.ltcmonth.com/ltc%20icon.htm.
Guess who? ***
LTC BULLET: HOW
MEDICAID SHORT CHANGES LTC PROVIDERS, INSURERS, AND PATIENTS
LTC Comment: A
couple days ago, we received the following inquiry from Kim Ketchum, CLTC, an
LTCi producer who is a longtime supporter and member of the Center for Long-Term
It is my understanding that the nursing home Medicaid residents must turn
over their monthly Social Security checks to the nursing home when becoming a
Medicaid participant. Wouldn't the monthly Social Security check more than make up
for the $13.30 per day shortfall BDO Seidman cites? Thanks, Kim
refers to our mention recently of a study that showed Medicaid reimburses
nursing homes on average $13.30 per bed day less than the cost of providing the
care. He wonders reasonably whether
the requirement that Medicaid recipients contribute all of their income,
including Social Security, except for a small personal needs allowance, toward
their cost of care wouldn't offset that otherwise substantial loss.
a good question and the answer elucidates just what a disastrous effect Medicaid
financing has on most nursing homes' ability to provide quality care.
you see, Medicaid pays nursing homes no more than its meager reimbursement
levels whether a recipient has any income to contribute or not.
All the Medicaid recipient's contribution does is raise the nursing
home's reimbursement up to the Medicaid level, which is the level at which their
loss is $13.30 per bed, per day according to the study.
The total loss to nursing homes from Medicaid reimbursement is
approaching $5 billion per year.
average, Medicaid reimburses nursing homes only 70 percent of their private-pay
rate. Thus, if private payers must
pay $6,000 per month for care, Medicaid pays on average only $4,200.
If the Medicaid resident has $2,000 of income that must be contributed
toward the cost of care, then the nursing home still gets only $4,200, the
resident pays $2,000 and Medicaid contributes only $2,200.
Who makes up the difference between what Medicaid pays, including the
amount paid by the recipients, and what it actually takes to run the nursing
home properly? You guessed it: the
few remaining private-payers who shell out full fees from their own pockets or
the handful who have LTC insurance policies.
New York Times highlighted this problem recently in an article by Milt
Freudenheim, "Low Payments by U.S. Raise Medical Bills Billions a
Year," June 1, 2006, http://www.nytimes.com/2006/06/01/business/01health.html?pagewanted=print.
"Employers and consumers are paying billions of
dollars more a year for medical care to compensate for imbalances in the
nation's health care system resulting from tight Medicare and Medicaid budgets,
according to Blue Cross officials and independent actuaries." Although this story was about acute care, exactly the same
problem occurs with Medicaid-financed long-term care.
why Medicaid can pay less than half the cost of nursing home care nationally,
but it still covers two-thirds of all nursing home residents.
Medicaid recipients are making up the difference with their Social
Security and other income. And
because Medicaid residents tend to be the longest stayers, Medicaid actually
touches nearly 80 percent of all nursing home patient days with its impossibly
consequences of these facts are devastating for everyone involved in long-term
care service delivery and financing.
THE NURSING HOMES' POINT OF VIEW: How
would you like to run a business where 80 percent of your sales bring in less
than your cost? You can't make up
for that in volume! If you've ever
wondered why nursing homes struggle to survive financially, have trouble paying
enough to attract competent caregivers, and provide care quality that is
constantly criticized, there's your answer.
THE NURSING HOME RESIDENTS' POINT OF VIEW:
The good news is that Medicaid-subsidized long-term care is easy to get
without spending down personal assets for care, especially if a Medicaid planner
is consulted. The bad news is that
most people don't plan or insure for long-term care, end up on Medicaid by
default and suffer the consequences in problems of access, quality and loss of
THE LTC INSURERS' AND REVERSE MORTGAGE LENDERS' POINT OF VIEW:
Few people buy their products to plan or pay for long-term care, because
the path of least resistance is to ignore the risk and cost of long-term care,
wait until expensive care is needed, and then shift the cost while protecting
the home equity to Medicaid, taxpayers, and nursing home owners.
THE ASSISTED LIVING AND HOME CARE PROVIDERS' POINT OF VIEW:
Medicaid's institutional bias and easy availability to even affluent
seniors siphons off a large portion of other providers' potential market by
making nursing home care artificially less expensive for uninsured consumers.
THE POINT OF VIEW OF THE TRULY NEEDY: Poor
people don't have the "key money" that Medicaid planners' affluent
clients use to buy their way into the best nursing homes.
So the poor pay in three ways: (1)
they can't protect the little wealth they have because they don't have access to
high-priced attorneys to help them divest or shelter it, (2) they have to
contribute almost all their income toward their cost of care, and (3) they end
up in the worst nursing homes that have the highest Medicaid resident ratios
because they can't buy their way into the best places.
THE RESPONSIBLE CONSUMERS' POINT OF VIEW: They
pay four times. Once when they buy
LTC insurance. Again, when they pay
taxes to support Medicaid. A third
time, when they have to pay on average half again as much for nursing home care
as Medicaid pays. And finally, a
fourth time, when they get less care quality because heavy dependency on
Medicaid drags down nursing home quality for everyone, not just Medicaid
is why nationally syndicated financial columnist Jane Bryant Quinn titled an
article excoriating Medicaid planning attorneys "Do Only the Suckers
it's not just the private-pay nursing home residents who are the suckers.
Nursing homes are suckers for putting up with this system.
LTC insurers and reverse mortgage lenders are suckers for letting public
welfare steal their rightful affluent client base.
Tax paying consumers are suckers for letting themselves get ripped off.
line, all the private sector players, who could and should be saving Medicaid by
financing most long-term care, are sanctioning their own victimization by
accepting the corrupt status quo. They've
ceded the moral high ground to Medicaid planners who profiteer on the welfare
program at the expense of everyone, especially the poor.
solution? More legislation like the
Deficit Reduction Act to target scarce Medicaid LTC resources to the genuinely
needy and encourage private financing of LTC through insurance and home equity
This isn't rocket science, folks, much less tilting at windmills. Just do it.