Higher acuity, assisted living behind nursing home Medicare spending growth, experts say

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Increased acuity and investment in dual eligibles at the state level have resulted in long-stay nursing home residents driving Medicare spending growth, according to a new analysis published this week in Health Affairs.

Containing costs within the population of those who qualify for both Medicare and Medicaid has long been a major consideration for policymakers. But few studies have taken a deeper look at spending for this population, researchers with the Vanderbilt University School of Medicine note.

Pouring over beneficiary data from 2007 to 2015, investigators found that — regardless of Medicaid participation or age — beneficiaries with long-term (three months or longer) nursing home use had some of the highest spending growth rates. Those averaged between 1.7 and 4.1%, they found.

“Considering that nursing home patients already have high Medicare spending levels, it's concerning that Medicare spending growth is also high for this population,” lead author Laura Keohane, Ph.D., an assistant professor in Vanderbilt's Department of Health Policy, told McKnight's.

Keohane said the study did not aim to explore why nursing home users experienced higher Medicare spending growth, at a time when the number of older residents at those homes decreased. But that's a topic that's ripe for further analysis. “An important question for future research is whether this increase in Medicare spending growth reflects greater complexity among nursing home patients as other long-term care options become more widely used,” she said.

David Grabowski, Ph.D., a professor of healthcare policy at Harvard Medical School and dual-eligible expert, believes that it does. He said this “important study” was the first he had seen measuring such spending growth for this population.

“Due to the growth in nursing home substitutes, nursing homes are increasingly treating frailer, more medically complex residents,” Grabowski said. “For dually eligible beneficiaries, state Medicaid programs have made a large investment in home- and community-based services and delayed nursing home entry for those healthier duals,” he said.

And for those Medicare-only, non-dual beneficiaries, he added, “Assisted living has siphoned off those healthier private payers. The increasing acuity among long-stay nursing home residents likely underlies the high rate of Medicare spending growth in this population.”

Overall, among both Medicare-only and dual-eligible beneficiaries who are ages 65 and older, nursing home users had the highest Medicare spending growth rates, at about 2.3% and 1.7%, respectively.