Medicaid payment policies for nursing home care: a national survey

Health Care Financing Review, Fall, 1991 by Robert J. Buchanan, R. Peter Madel, Dan Persons

Percent patient days

Although each Medicaid program pays for care provided by both SNFs and ICFs, the placement of Medicaid patients in these two types of nursing home care varies widely among the States. Table 1 presents the number of Medicaid patient days in SNFs as a percent of total Medicaid nursing home days (Medicaid paid days in SNFs plus Medicaid paid days in ICFs) for each State during 1987. In California, SNFs were paid for more than 95 percent of the total Medi-Cal patient days in nursing homes during 1987. In contrast, SNFs were paid for only about one-tenth of 1 percent of total Medicaid nursing home days in New Hampshire during 1987. For the 48 States and the District of Columbia with available data, SNFs were paid for an average of 23.65 percent of the total Medicaid nursing home days.

These disparties among the States in SNF and ICF utilization levels by Medicaid recipients raise questions about the meaning of these SNF and ICF definitions across States. As a result, many States are paying both SNFs and ICFs for care provided to Medicaid recipients with the same payment level (Table 1). The SNF and ICF utilization disparties among States also raise questions about the appropriateness of the level of nursing home care many Medicaid recipients receive across States. Do the health conditions of Medicaid recipients in Arkansas, California, Connecticut, New York, and Wisconsin differ enough from the conditions of Medicaid patients in Iowa, Kansas, Louisiana, Montana, New Hampshire, and Alabama to justify the sharply different utilization rates of care provided by SNFs?

Private pay difference

Differences exist in the levels of payment by private patients and by the Medicaid programs for nursing home care. For example, studies have concluded that private patients, with their higher payments, subsidize the cost of care provided to Medicaid patients (Birnbaum et al., 1981a; Arling, Nordquist, and Capitman, 1987). To address this issue, respondents to the 1988 survey were asked to estimate the difference between the private payment and the Medicaid payment for both skilled care and intermediate care in their State during 1987. The questionnaire provided a series of dollar ranges (i.e., "$1.00-$5.00," "$6.00-$10.00," "$11.00-$15.00," $16.00-$20.00," "$21.00-$25.00," "over $25.00," and "No difference") to assist the Medicaid programs in estimating these differences.

The responses indicate that large differences exist in most States between the per diem payments made by the Medicaid programs and those made by private patients. Table 1 presents the responses from the 45 States providing estimates. To calculate an average difference between private payments and Medicaid payments for skilled care and intermediate care for all States providing estimates, the midpoint of the selected dollar range (i.e., $3.00 for the $1.00-$5.00 range) was assigned to each State in the calculation of the mean. The average estimate of the difference between the level of payment from private patients and from the Medicaid programs was $11.98 per day for skilled care and $10.19 per day for intermediate care during 1987.