Nursing Homes: The Pros and Cons of Medicaid-Sponsored Residents

The pros and cons of medicaid-sponsored residents
Guest post contributed by Senior Planning Services 


Applicants to nursing home care have several avenues of funding at their disposal besides out-of-pocket payments, including, long-term care insurance, Medicare for a short stay and Medicaid for a prolonged stay.

There are many facilities that accept Medicaid-sponsored residents while many do not. Here we have examined some of the pros and cons for nursing homes to accept vs. deny Medicaid residents to their facility. We’ve also looked at some stats on the average length of a nursing home stay, the average age of residents, and the percent of patients on Medicaid.

What is the likelihood that an individual will need to be admitted to a long term care facility?

According to one national study, of the approximately 2.2 million individuals turning 65 annually, about 900,000 will be admitted to a nursing home. A similar study found that one quarter of all Americans 65 and older will spend at least one year in a long term care facility.

How long does an average resident spend in a nursing home before being discharged or dying?

To determine the average length of stay for nursing home residents before dying, experts used data from the Health and Retirement Study (HRS). The findings were as follows;
  • 65% of residents died within one year of being admitted to nursing homes.
  • 55% died within 6 months of admittance.
  • The average length of stay was 14 months due to a small number of residents who lived quite long. According to other studies for long-term care residents, the average length of stay for current residents was 835 days (2-2 ½ years) while the length for discharged residents was 270 days (almost 9 months).
  • 5 months was the median length of stay. Men tended to live shorter than women, living only 3 months in a nursing home while women lived for about 8 months.
  • Married people lived shorter than single people, on average living about 4 months shorter.
  • Individuals with a higher net worth died quicker in a nursing home. Those in the highest quartile died about 6 months sooner than those in the lowest quarter.
What is the average age that nursing residents are?
  • 51% are 85+
  • 25% are 75-84 
  • 13% are 65-74
What's the percent of private insurance residents, Medicaid patients, private funds?
  • There's no question about it; Medicaid pays the lion's share of the total nursing home cost, paying 49.3% of the nursing home industry’s $ 88 million budget. The remaining budget is covered; 
  • 25.1% out-of-pocket payments
  • 12.5% Medicare for short-term care
  • 7.5% private insurance (and growing every year) 
  • 5.6% other government programs
What's the occupancy rate in a nursing facility?

According to many studies, only 86.3% of all beds across the country are occupied at any given time. According to the most recent stats, there are 1.7 million beds in 16,100 nursing homes in the United States. Only 1.5 million beds are occupied, leaving 200,000 beds unoccupied.

What are the pros of accepting Medicaid patients?
  • Filling the beds. Not accepting Medicaid-sponsored applicants means that only about one third of the general population will be able to afford the services that your facility offers. The majority of low to middle-income families will not be able to afford long-term care out-of-pocket and will need to rely on being covered by Medicaid. Opening the facility for all applicants, or -at least- for a significant portion of beds to be made available for Medicaid applicants, will greatly close the census gap.
  • Filling beds with desirable elements. Some nursing homes, especially large ones, have been cited recently for admitting younger individuals to their facility, sometimes even people in their 20’s and 30’s, for a need to fill beds! There have been multiple instances of drug abuse and other crime as these individuals are admitted into larger facilities and the facilities are not equipped for the needs of these individuals. This has understandably earned these nursing homes an irreparably damaged reputation. 
  • Offer incentive to those that can only afford assisted living. In order to combat the upward assisted living trend as well as government efforts to cut funding for nursing homes and increasing aid for in-home care, many facilities have begun to accept all applicants. The population now being admitted to the homes is generally frailer and require more acute care, often resulting in a shorter nursing home stay and faster turnover rate. This does not bode well for the nursing home industry who are responding by trying to reinvent themselves by offering new and improved services.
  • Conscience. Often, a resident is accepted to a non-Medicaid facility and after a prolonged stay, their out-of-pocket funds are depleted. Having the patient transferred out of the facility to a facility that accepts Medicaid-sponsored patients would be extremely distressful for the patient. According to some studies, patients are between 5 and 8 times more likely to die faster as a result of an involuntary transfer. From a purely human standpoint, facilities need to be willing to work with patients to prevent this from happening.
What are the cons of accepting Medicaid patients?
  • Having to meet federal standards to obtain a license from the state and undergoing periodical state inspections.
  • The cost to the nursing is not completely covered by the Medicaid patient. If the nursing home does not have an issue filling beds, then it may not be worthwhile for the facility to give up the bed for a Medicaid-sponsored resident.
  • Many potential Medicaid-sponsored residents have not yet been approved for Medicaid at the time of their application to the facility and their status is still pending. A Medicaid-pending applicant adds additional risks for the facility, if the application is denied. This means that the initial cost of the first 90-day period will not be retroactively covered by Medicaid from the date of the Medicaid request and the expense will fall on the facility. 

Conclusion: There are many variables for nursing homes to consider when determining their Medicaid applicant protocol and this article offers a small snapshot into some of the issues facility owners are dealing with. 




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