Nursing home cost growth slowing

Nursing Homes, Feb, 2004 by Douglas J. Edwards

Spending on services provided by free-standing SNFs increased by 4.1% in 2002, compared to a 5.7% growth rate for nursing home spending in 2001, according to a study published in a recent issue of Health Affairs (Volume 23, Number 1). Slow growth in nursing facility capacity and a deceleration in the growth of service and supply costs to provide long term care help to account for the slowdown, report the authors, who are from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS).

A small increase in aged and disabled Medicaid recipients accounted for most of the increase in Medicaid spending in 2002; other adults and children accounted for 85% of the growth in eligible recipients but only 36% of the increase in Medicaid spending. Forty-five states have instituted measures to control Medicaid spending growth, the authors noted.

In addition, the authors pointed out that states are shifting more nursing home and other institutional patients to community settings in response to the Supreme Court's Olmstead decision, which encourages the treatment of people with disabilities in the least restrictive settings as possible.