Entering a Nursing Home--Costly Implications for Medicaid and the Elderly

PAD-80-12: Published: Nov 26, 1979. Publicly Released: Nov 26, 1979.

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Medicaid is the chief support for the long-term care of the chronically impaired elderly in nursing homes. In fiscal year 1978 it financed, at a cost of $7.2 billion, 46 percent of the total national nursing home bill. A widely recognized problem with Medicaid's extensive support is that many elderly persons neither need nor prefer nursing home care.

Three issues contribute to the nursing home placement of the chronically impaired elderly even when community-based long-term care is preferred and appropriate: (1) Medicaid's eligiblity policies which create financial incentives to use nursing homes; (2) barriers encountered by the elderly who attempt to obtain community services; and (3) Medicaid assessment procedures for determining the need for nursing home care. As long as Medicaid's nursing home coverage is the only readily available source of financial assistance for long-term care, many chronically impaired elderly will be placed in nursing homes even though this is a more intensive care level than is needed. Another problem is that many of the elderly need a variety of health and social services which involve a maze of providers, each one having its own eligibility criteria, assessment procedures, and application forms. Generally, there is no one to turn to for assistance in planning and obtaining the services needed, and nursing home placement offers a packaged solution to the long-term care problems. Medicaid cannot adequately control avoidable nursing home utilization because of inadequate assessment mechanisms and lack of authority to screen all applicants for admission. Finally, State and local efforts to reduce Medicaid support for avoidable institutionalization are impeded by the fragmentation and gaps in Federal long-term care funding and the current structure of the Medicaid program.

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