Study: Medicaid continues to under fund long-term care

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For the fourth consecutive year, accounting firm BDO Seidman found states inadequately funded nursing home care -- this time by $4.5 billion annually.

The Medicaid shortfalls are a direct result of the fact that "each year the rate increases have fallen short of nursing home cost increases," the report says. Cost increases have exceeded rate increases by 2% since 1999, according to the study, which the American Health Care Association commissions annually.

BDO Seidman analyzed the shortfall between Medicaid reimbursement and allowable Medicaid costs, derived from 2002 rate and cost data. Funding is calculated as the differential between the allowable costs of care, per patient per day and government reimbursements.

The average shortfall in Medicaid reimbursement was  $12.58 per Medicaid patient day in 2002 -- 9% higher than the previous year's average shortfall of $11.55 per Medicaid patient day. Shortfalls were the greatest in New Hampshire ($28.98 per resident day), New Jersey ($27.85), Arizona ($23.19), Missouri ($22.81) and New York ($21.23).

The firm's analysis for this year is based upon data from 36 states and represents more than 86% of Medicaid patient days nationwide. The full study is available at