Nursing homes beneficial for Medicare program, researchers find

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Nursing homes often decrease residents' need for services covered under Medicare, according to new research published by the Centers for Medicare & Medicaid Services. The results reinforce the idea that accountable care organizations can lower costs by partnering with long-term care facilities.

Researchers from the University of Minnesota School of Public Health and the University of Hong Kong looked at Medicare and Medicaid expenditures for seniors covered by both government insurance programs, and compared that with expenditures for those covered by only one. The team was looking for information about how case mix and long-term care impacts spending, and for evidence of “de facto cross-subsidization” of Medicare and Medicaid.

There has long been a concern, and some supporting research, that providers shift costs from Medicaid to Medicare for dual-eligible patients. 

After analyzing 2005 data for seniors in seven states, the researchers determined that dual-eligibles had higher medical costs — covered by Medicare — if they were living in a community setting versus being in a nursing home.

“Our findings suggest that nursing homes may be subsidizing Medicare by reducing hospital use and lowering medical expenditures,” the authors wrote. “The difference is not likely due to case mix, which is higher in nursing homes than in community LTC.”

Researchers hypothesized that some nursing home residents may be receiving better nursing care than dual eligibles in a community setting, or that nursing home residents are less likely to receive hospital care.

Policymakers and leaders of coordinated care organizations should note the findings, which underscore how intertwined long-term care and medical expenditures are, the researchers stated. Better coordination — such as through initiatives to reduce hospitalizations by bringing more robust primary medical care to nursing home residents — could unlock significant savings, they wrote.

Click here to access the complete article, published in the Medicare & Medicaid Research Review.

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