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Anthony Cirillo

AHCA Annual Report Shows Largest Medicaid Shortfall Since Study Inception

By February 13, 2013

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The American Health Care Association (AHCA) recently released a report by Eljay, LLC, which demonstrates Medicaid shortfall payments. The annual study, titled A Report on Shortfalls in Medicaid Funding for Nursing Center Care, projects that Medicaid underpayment to providers will exceed $7 billion nationally. On a per-resident, per-day basis, the average 2012 projected shortfall amount was $22.34. This is the largest shortfall reported since the inception of the study in 1999.

"There's a lot of talk in Washington about Medicaid and how it's ripe for cuts," said AHCA President and CEO Mark Parkinson. "This report offers hard data that argues the opposite. The reality is that this program already underpays nursing center providers. Cuts to Medicaid do not make sense for providers or for the millions of Americans who depend on the program"

Highlights from the report include:

  • The 2012 Medicaid shortfall is projected to exceed $ 7 billion nationally.
  • The estimated average Medicaid shortfall for 2012 of $22.34 per Medicaid patient day is 14.3 percent higher than the preceding year's projected shortfall of $19.55.
  • For a typical 100-bed facility in which 63 percent of residents rely on Medicaid for coverage, this shortfall would mean a loss of more than $500,000 annually.
  • Between 2010 and 2012, allowable costs increased an average of 4.2 percent, while Medicaid reimbursement rates only increased an average of 2.5 percent.

"As a researcher and author of this study for the past decade, I see adequacy of Medicaid payment for nursing facility services continuing to decline to their lowest point since the inception of the study," said Joe Lubarksy, President of Eljay, LLC. "I don't predict any significant shifts until there are significant improvements in state economies, and even then, the trend will continue to be towards a higher priority of funding for non-institutional services."

No doubt, so called entitlement programs will continue to be scrutinized and there is incredible waste not to mention fraud in the industry. So of course there must be a middle ground in this argument. On the hospital side of the equation, savvy providers have "managed to Medicare" that is they know that Medicaid is their poorest payer and private insurer their best. By streamlining their operations as if every payment was made by Medicare, the middle ground payer, they have hedged their bets to assure profitable operations. This same thinking needs to be applied to long-term care providers too.

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