Making Georgia's Nursing Home Reimbursement More Equitable

HRD-86-58: Published: May 12, 1986. Publicly Released: May 12, 1986.

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GAO studied Georgia's reimbursement system for free-standing intermingled nursing homes to determine whether: (1) its grouping methodology for reimbursement purposes resulted in equitable reimbursement for intermingled homes; and (2) applying minimum nursing standards resulted in appropriate payment levels.

GAO noted that: (1) Georgia did not conduct studies or analyses to serve as a basis for establishing appropriate nursing home groupings for reimbursement purposes; and (2) the Health Care Financing Administration (HCFA) accepted Georgia's assurance that its nursing home reimbursement rates were reasonable and adequate without supporting analysis. GAO found that Georgia's grouping method: (1) resulted in the classification of 66 percent of its nursing homes as free-standing intermingled homes able to provide care for residents requiring either skilled-nursing or intermediate care; (2) did not consider homes' resident mixes, a significant cost determinant; (3) may cause inadequate reimbursement for some homes with a high concentration of skilled-care residents and few intermediate-care residents; and (4) may provide higher reimbursement to some intermingled nursing homes having primarily intermediate-care residents with lower nursing-related costs. GAO also found that Georgia could reduce Medicaid costs by basing its minimum nursing standards on nursing home residents' actual care requirements rather than on facility classification.

Recommendation for Executive Action

  1. Status: Closed - Not Implemented

    Comments: HCFA concurred with this recommendation, but it will not require states to take corrective action because it believes that it does not have legislative authority.

    Recommendation: The Region IV Administrator, HCFA, should require Georgia to perform adequate studies or analyses to support its findings and assurances that its payment rates for intermingled nursing homes are reasonable and adequate to meet the costs incurred by efficiently and economically operated homes.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration: Region IV, Atlanta, GA


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