Study: Medicaid continues to underpay nursing homes

Share this content:
Medicaid paid nursing home operators an average of $13.72 less than allowable costs per resident day in 2006. That is a shortfall of $4.6 billion overall, according to preliminary results of an annual study released Monday at the American Health Care Association's annual conference in Nashville.

Improved state budgets and a significant rise in provider taxes are expected to improve underpayments (about $12.50 per resident day or $4.2 billion less overall), revealed Joe Lubarsky, president of consulting firm Eljay LLC, at an education session on Medicaid and Medicare at the conference. Still, it is "highly likely that the trend will be reversed in fiscal 2009 and 2010," he warned.

Final results for 2006 will be released in about a month, said Lubarsky, who has conducted the study for the last eight years. Vermont, Illinois, Delaware, Wyoming and New York are expected to show the biggest shortfalls per resident day.

Lubarsky also documented how powerfully Medicaid spending on home- and community-based services (HCBS) has taken hold nationally. Spending on nursing home care rose from $40 billion in 2000 to $49 billion in 2008—a 2.8% compounded growth rate. Meanwhile, spending on HCBS soared from $12 billion to $34 billion for a 13% compounded growth rate over the same time period.

"We are losing the battle as far as getting the share of Medicaid expenditure and I think that will continue," Lubarsky said.