What nursing homes need, versus what they get

Senior living’s caregiving sectors — nursing homes, assisted living and home care — share problems and needs in varying degrees. But what they get from long-term care (LTC) research is seldom what would address their problems or meet their needs.

Nursing homes’ biggest problems are excessive dependency on low Medicaid reimbursement aggravated by too much unwarranted regulation, such as mandatory staffing levels. What nursing homes need are policy proposals and advocacy to reduce Medicaid census and increase private, market-rate payers. But is that what the research delivers?

Hardly. Most LTC analysts and special task forces recommend new, compulsory, social insurance programs on the model of Medicare and Social Security. They ignore those aging entitlements’ dubious financial prospects. They never explain how more government money and regulation would fix problems created by the same.

The assisted living sector has a related Medicaid problem. Only 18% of assisted living residents receive Medicaid. That is a net plus for the industry as it fills otherwise empty rooms until private payers appear. But why aren’t there enough private payers to fill those rooms in the first place? Medicaid’s income and asset rules divert many financially capable prospects into publicly subsidized nursing homes.

Medicaid allows higher-income people to qualify for LTC benefits if their private medical and LTC expenditures are high enough. Nor do assets interfere with Medicaid LTC eligibility as most large wealth, such as home equity, is exempt. Allowing affluent people onto Medicaid converts their private payments into the welfare program’s meager rates for ALFs and nursing homes.

Does the research community propose solutions to this conundrum? Not often. They are more apt to join the Centers for Medicare & Medicaid Services, find fault, and simply demand higher care standards without providing sufficient compensatory revenue. Expecting Ritz Carlton care at Motel 6 rates is a fantasy, not a plan.

The same problems impact the home care sector. Low Medicaid reimbursements create caregiver shortages. Easy Medicaid financial eligibility diverts people from private pay home care to publicly subsidized nursing home, assisted living, or home and community-based care alternatives. Cost shifting to private payers makes the home care and assisted living markets more expensive than they would otherwise be. But what does the home care sector get from researchers? 

Nothing to address that problem. Rather, decades of advocacy for “rebalancing” Medicaid from nursing homes to home care. On the dubious premise that home care saves money, Medicaid has gradually tipped from mostly institutional to mostly home care over time. But that change did not save money as intended, because so many people who receive home care end up needing nursing homes eventually anyway.

The net effect of rebalancing was to make Medicaid more attractive, induce more people to take advantage of its generous financial eligibility rules, crowd out potential private payers from unsubsidized, market-based home care and vastly increase Medicaid LTC expenditures.

Finally, researchers steeped in the “LTC Narrative” — that only government can fix LTC’s problems — routinely recommend “value-based care.” VBC is an LTC delivery model based on paying for patient outcomes instead of for delivered services with the goal to save money and improve care. But such a system makes the government and its contractors, usually big insurance companies, the arbiters of care “value.” Both have conflicts of interest, inclining them to define value in ways to maximize savings (for the government) or profits (for the insurers).

Patients and their needs are disvalued. In a free, private care market, people demand value by vetting providers and walking away if they’re disappointed. Patients are empowered. But where is the research and advocacy favoring market-based reform? Mostly missing.

For LTC research and recommendations that speak directly to the senior living industry’s actual problems and needs, see the Paragon Health Institute’s reports titled “Long-Term Care: The Problem” and “Long-Term Care: The Solution.” You will find market-based analysis and proposals that will soon be on the public policy agenda as debt and inflation continue to undercut government-based LTC programs.

Stephen Moses is president of the Center for Long-Term Care Reform, a visiting fellow at the Paragon Health Institute and the author of Paragon’s “Long-Term Care: The Problem” and “Long-Term Care: The Solution.” Reach him at [email protected].

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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