Skilled nursing facilities face strident criticism daily. A typical litany goes like this. Nursing homes offer poor access and quality, too few caregivers, rundown facilities, and deficient care plans. They disregard residents’ preferences and use excessive physical restraints and behavior-modifying drugs. They compel families to take financial responsibility, refuse to accept Medicaid or to bill Medicare, and evict improperly. Such attacks are unrelenting.
Now, balance that torrent of complaints with what you know about people in the nursing home business. Most I’ve met are dedicated, hard-working and passionate about delivering the best possible care. Especially the frontline workers perform extremely difficult, often thankless tasks for notoriously low wages. They transfer patients, feed and bathe them, ensure hygiene, turn the bedridden to avoid pressure sores, manage medications, deal with demanding visitors, keep records, maintain care plans, provide memory care and so, on and on.
Caring for frail, elderly, often cognitively impaired, sometimes belligerent patients is perilous. The Bureau of Labor Statistics reported that nursing homes were among the most dangerous workplaces in the United States.
So, how can we reconcile the bitter censure of nursing homes with the hard work and dedication of their workers, managers and owners? It reminds me of the maxim “You can’t make a silk purse out of a sow’s ear.” The Cambridge Dictionary says that expression is “used to mean that you cannot make something good out of something that is naturally bad.”
Medicaid is the sow’s ear of nursing home care. Just about everything that is wrong with long-term care services and financing, including what causes the shrill complaints about SNF care, occurs because too many people rely on Medicaid, and the program pays too little to fund top-notch care access and quality.
What causes those two problems? Why are too many people dependent on Medicaid, and why does Medicaid pay too little for their care?
Medicaid’s generous financial eligibility rules cause too many people to qualify for the program who could, should and would have paid privately at market rates otherwise. High income does not block Medicaid eligibility because most states deduct private medical and LTC expenses before applying a low-income standard. Other states allow income diversion trusts which achieve the same purpose. A good rule of thumb is that income below the cost of a nursing home, easily $8,000 or $9,000 per month, hardly low income, is not disqualifying.
Likewise, assets rarely obstruct Medicaid LTC eligibility. Most large assets are exempt, such as home equity, a business, a car, personal belongings, household furnishings, and even IRAs if they’re in payout status, as most are for the elderly due to required minimum distribution (RMD) rules.
Any remaining countable wealth over $2,000 is easily made noncountable by using it to purchase any of a vast list of exempt assets easily found online. Bottom line, neither high income nor big assets obstruct Medicaid LTC eligibility. That’s why too many people depend on Medicaid for their LTC.
But what accounts for Medicaid paying too little to fund high-quality LTC? Beyond the cliché that programs for the poor are poor programs, the reason is directly related to Medicaid’s generous income eligibility rules. Non-Medicaid SNF residents pay market rates that are about half again as much as Medicaid pays. But there are hardly any private payers left. SNF private revenue has collapsed over the Medicaid years from around half to only seven percent. Why?
Most residents are Medicaid-eligible when they begin SNF care. Some pay privately for a while using “key money” to gain access to the nicest nursing homes. But nearly all end up on Medicaid in short order. At that point, they must contribute most of their income, minus a small personal needs allowance, to offset Medicaid’s cost for their care. By then, nearly all of their Social Security, pension and other income is going to the nursing home, but no longer at the market rate, but rather at the Medicaid rate, roughly one-third less. That is why SNFs struggle financially.
What does this mean from Medicaid’s point of view? It makes Medicaid look like a hero. When recipients pay most (sometimes all) of the Medicaid rate out of their private incomes, it looks like Medicaid is a great bargain for taxpayers. It covers almost two-thirds of all SNF residents but pays only 31% of the cost. Recipients also get a deep discount compared to market rates, even if they don’t plan ahead to avoid Medicaid’s mandatory, if spottily enforced, estate recovery.
Put it all together, and what you have is a system that funds low-cost care of uncertain quality, makes Medicaid look like a fiscal champion, and blames everything on providers who are actually long-suffering victims of a corrupt system.
To add insult to injury, CMS now wants LTC providers to hire more staff and provide better care without commensurate compensation and without confronting the underlying problems just recounted. When you’re played for a sucker, it’s time to fight back.
To fix these problems and move forward, consider these two studies from the Paragon Health Institute: “Long-Term Care: The Problem” and “Long-Term Care: The Solution.” To find the funds to fix the problems, stanch “Medicaid’s $100+ Billion Leak.”
Stephen Moses is president of the Center for Long-Term Care Reform, a visiting fellow at the Paragon Health Institute and the author of “Long-Term Care: The Problem” and “Long-Term Care: The Solution.”
The opinions expressed in McKnight’s Long-Term Care News guest submissions are the author’s and are not necessarily those of McKnight’s Long-Term Care News or its editors.
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