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Nursing facility care: duals shifted away from Medicaid?
Over half of nursing facility residents are dual-eligibles. This means they must contend with a system of care that often is not well-coordinated or efficient.
However, there are potential opportunities to improve care for dual-eligibles by shifting their care in long-term nursing facility services from Medicaid to Medicare, according to a March 2010 brief from Mathematica Policy Research, a Princeton, NJ-based nonpartisan research firm, Coordinating and Improving Care for Dual Eligibles in Nursing Facilities: Current Obstacles and Pathways to Improvement.
This would be a major change, acknowledges Mathematica senior fellow James Verdier, author of the brief. "I wouldn't expect it to happen right away or without a lot of discussion about the pros and cons," says Mr. Verdier.
There are currently significant problems with coordinating and monitoring prescription drug use in nursing facilities. While Medicare is responsible for the drug benefit for dual-eligibles, Medicaid doesn't get any data on the types of prescription drugs being used in nursing facilities by these residents, even when their nursing facility care is being paid for by Medicaid.
"Most of the Medicare Part D drug plans don't really have the resources or the incentives to closely monitor the prescription drugs used in nursing facilities for either clinical or cost-effectiveness," says Mr. Verdier. "There are a lot of problems on the prescription drug side that could be dealt with more effectively if Medicare was responsible not just for short-term post-acute nursing facility care, but also the long-term care for which Medicaid is now responsible."
The change might also prevent avoidable hospitalizations. "Right now, there are significant financial benefits for nursing facilities if a resident goes into a hospital for three days and then comes back," says Mr. Verdier. "They typically get a higher Medicare reimbursement for a period of time for that resident."
In theory, a lot of things could be done in nursing facilities that would reduce the risk of that kind of hospitalization. For example, prevention of pressure sores and various exacerbations of chronic diseases and illnesses could prevent someone from being admitted to a hospital. "The nursing facility itself, with support from Medicaid, could do that," says Mr. Verdier.
However, Medicaid lacks any financial incentive to fund these kinds of activities within nursing facilities, because the savings would all accrue to Medicare and not to Medicaid. "If there was a single payer, Medicare, that was responsible for both the nursing facility care and the hospital care, they would have every incentive to reduce hospital care and also the ability to pay extra amounts from hospital savings to provide the kind of care in the nursing facility that would prevent someone from having to go into the hospital," says Mr. Verdier.
Currently, Medicare is responsible for only about 20% of the market for nursing facility care. Medicaid pays for over 40% and private pay for most of the remainder, including a very small amount from private insurance.
"So, Medicare doesn't have as much leverage over what goes on in nursing facilities or for how their performance is monitored and rewarded, as they would if they had financial responsibility not only for the portion of that they now pay, but the portion that Medicaid now pays, as well," says Mr. Verdier.
Pilot programs are currently under way looking at avoiding unnecessary hospitalizations and re-hospitalizations, including within nursing facilities. While many people in nursing facilities are there because they have serious illnesses and disabilities and it's not surprising to see some of them get admitted to the hospital many admissions could be prevented.
"There really is an opportunity to reduce a lot of those hospitalizations, if only because the financial incentives to hospitalize people are now so great," says Mr. Verdier. "Just changing those financial incentives, all by itself, could have a significant impact."
A Federal Coordinated Health Care Office was established by the new health care reform legislation, responsible for supporting state efforts to coordinate and align acute care and long-term care services for duals. "By setting up this new office, and having the head of this office report directly to the administrator of CMS [the Centers for Medicare & Medicaid Services], that really emphasizes the importance of dual-eligible issues as part of the health care reform legislation," says Mr. Verdier.
Mr. Verdier is also working on a project with the Medicare Payment Advisory Commission (MedPAC) that will examine programs aimed at improving the coordination of care for dual-eligibles, including long-term care and nursing facilities. "We will be doing some site visits with MedPAC staff to especially promising models," says Mr. Verdier. "So there is a growing interest in the whole dual-eligibles issue, and nursing facilities are a part of that."
Contact Mr. Verdier at (202) 484-4520 or JVerdier@Mathematica-Mpr.com.