Study: Medicaid funding gap may worsen in year ahead

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Mark Parkinson, AHCA president and CEO
Mark Parkinson, AHCA president and CEO

Aggregate and per-patient-day Medicaid funding levels were woefully short in 2010, according to the latest provider-sponsored research on the subject. U.S. nursing home operators were paid $5.6 billion less than the actual cost of care, down from a $4.7 billion shortfall the previous year, researchers said.

The Medicaid program, on average, reimbursed providers just 91 cents for every dollar of “allowable cost incurred” for beneficiaries, according to the report, which was released by the American Health Care Association in mid-January.

Report authors painted gloomier days ahead.

“The Medicaid reimbursement outlook for 2011 is bleak. It is worse than any other year in which this annual report has been compiled due to unprecedented state budget deficits and expiration of federal stimulus funds as of July 1, 2011,” wrote Joseph Lubarsky, President of Eljay LLC, which conducts the study each year.

He said the $5.6 billion figure equates to underfunding of $17.33 per patient day—and could be an underestimate.

“The actual shortfall in 2010 will likely be somewhat higher, in that historically, actual cost increases have outpaced projected inflationary increases for nursing homes,” wrote Lubarsky, who completed the report in December.

Medicaid is the largest single payer of long-term care in America, covering nearly two-thirds of all U.S. nursing home care.

Many states and facilities counter-balance Medicaid funding levels with Medicare funding. But there is significant “danger” in having the also-stressed Medicare program “prop up” Medicaid, cautioned AHCA President and CEO Mark Parkinson.

According to the report, the states that underfunded Medicaid providers by the greatest per-patient-day margins were:  New York ($47.95), New Hampshire ($31.25), Massachusetts ($31.22), New Jersey ($29.29) and Washington ($28.18).

Although Illinois was in the top three for aggregate underfunding, it placed 10th on the per-patient-day underfunding ($21.95).

For more study results, visit