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.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress may want to implement an approach proposed by GAO as a community-wide long-term demonstration project in several areas to obtain more concrete information on costs, people who could be served, service utilization, and systemwide effects. The approach includes establishing a Preadmission Screening Program with the following components: (1) comprehensive needs assessments for all applicants to nursing homes; (2) assistance in planning and obtaining services to help individuals stay in the community; (3) coordination and monitoring of community care; (4) payment for services outside a nursing home; and (5) control over costs and utilization. The Preadmission Screening Program could be located in the Department of Health, Education, and Welfare, with responsibility assigned to public health departments at the State and local level. Data obtained from the needs assessments should be used in developing a more reliable basis for projecting nursing home bed needs than presently exist. This approach has been developed to focus on those individuals who would be directly admitted to a nursing home if they did not receive supportive in-home or community-based services. Controls on costs for each individual served could be maintained at the comparable level of expenditures for nursing home care.


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