Provider groups are lambasting a new economic study that claims that nursing homes were overpaid by $1 billion in Medicaid dollars, saying its publisher should be “embarrassed.”
The analysis, recently published by the National Bureau of Economic Research, asserts that longer stays in skilled nursing facilities often do not translate to better outcomes. Keying in on Medicaid data from about 940,000 nursing home stays in California, Ohio, Pennsylvania and New Jersey, the researchers estimated that providers were overpaid about $5,500 per resident case. Extrapolating that number nationwide, they estimated that overspending on Medicaid each year climbs to about $1 billion.
Provider leaders blasted the study’s findings. Katie Smith Sloan, president and CEO of LeadingAge, called the study “deeply flawed,” noting it used data more than a decade old — from before federal and state policy changes started redirecting dollars toward home- and community-based care.
Further, researchers attempted to extrapolate nationwide payment policies from examining only four states, she added, although rates are set by each state, with no federal guidelines.
“Anyone at all familiar with the way nursing home care is financed would laugh at the study’s contention that Medicaid somehow incentivizes nursing homes to keep residents on a long-stay basis rather than discharging them to the community,” Smith Sloan told McKnight’s. “The truth is that long-stay nursing home residents whose care is covered by Medicaid generally are not able to receive the level of services they need, other than in a nursing home. There is no setting to which they could be discharged where they would get the care they need.”
Data in the analysis came from the 2000 to 2005 time period. Smith Sloan said that since that time, public policy has shifted toward providing more long-term services in community settings. As a result, the population in nursing homes is “overwhelmingly” made up of people who can’t live elsewhere.
“The National Bureau of Economic Research should have been embarrassed to publish a paper with so little relevance to current Medicaid and long-term services and supports policy,” Smith Sloan emphasized. “That this ‘research’ received a federal grant is even worse.”
Mike Cheek, senior VP of reimbursement policy at the American Health Care Association, similarly called the analysis “oversimplified” and “narrowly focused.” He noted that the researchers restricted their sample to seniors with low care needs and high prospects to return to the community.
“This is an inaccurate representation, as many nursing home residents today have multiple chronic conditions and need more support with activities of daily living,” Cheek told McKnight’s.
In response, study co-author Vincent Pohl asserted that, while the data is old, the way that nursing homes are reimbursed by Medicaid, as well as the lack of patient cost sharing, “have not changed since then.”
“Therefore, there is no reason to believe that our results should not be applicable to more recent time periods,” said Pohl, an assistant professor in the University of Georgia’s Department of Economics.
“Although Medicaid rates are set by individual states, it is usually the case that they exceed the cost of providing long term care,” he contended, in direct contradiction to providers’ long-stated claim that Medicaid rates routinely do not cover the costs of care. “If this holds, nursing homes have a financial incentive to lengthen nursing home stays that are funded by Medicaid at least when they have free capacity.”
