Posts Tagged ‘American Health Care Association’

Medicaid Underpays Nursing Homes By $9 Per Patient Day


A new study commissioned by the American Health Care Association confirms what most senior advocates have long suspected: funding for long-term care services (and particularly nursing home care) is insufficient to pay the actual cost of care. While there is significant variation among the states, the federal-state Medicaid partnership program underpays providers by more than $3 billion each year.

The AHCA study was actually completed by accounting firm BDO Seidman, based on data collected from individual state Medicaid agencies. Arizona’s AHCCCS program failed to respond to the study, but 36 states did provide information from which the accounting firm could determine rough national figures for the Medicaid underpayment.

Most analysts agree that slightly less than half of all 65-year-olds can expect to spend at least some portion of the rest of their lives in a nursing home, so the payment system for nursing home care is important to a large portion of the senior population. A majority of nursing home residents (over 67% nationally and 63% in Arizona) receive Medicaid benefits, making the program’s reimbursement rates critically important for ensuring future quality in long-term care facilities.

The AHCA study looked at 1999 reimbursement rates for the 36 states providing data. On average, Medicaid’s shortfall was a little more than $9 for each day a Medicaid patient spent in the nursing home; with just over a million Medicaid patients in nursing homes nationwide on any given day, the annual shortfall exceeds $3.3 billion nationwide.

New Jersey and New York showed the largest shortfall per patient and total shortfall, respectively. Alabama was the only state which paid more in Medicaid benefits than the cost of patient care; its reimbursement of $102.78 per Medicaid patient day was actually $2.48 more than the facility’s costs.

Although most states in the West (notably Nevada, Oregon, and Utah) underpaid by more than the national average, Colorado, California and New Mexico helped keep the region’s average underpayment lower than the national figure. The South (including Texas, Alabama and Virginia, three of the states with the lowest underpayment rates) demonstrated regional rates closest to the allowable Medicaid costs—despite including Florida, one of the least generous states. Underpayments in the Northeast exceeded the national average in every state except Connecticut and West Virginia. The average shortfall for states in the Midwest was almost identical to (and slightly below) the national average shortfall.

The AHCA website ( contains more detail about the study as well as other statistical details.

Medicaid Liens in California

MARCH 14, 1994 VOLUME 1, NUMBER 17

A recent article in the Orange County Register indicated that many Medicaid recipients (and newspaper reporters) are likely to be surprised by the implementation of Medicaid estate recovery programs. The article (reprinted in the Arizona Republic as “Californians get surprise bills for care”) detailed the plights of several Californians whose spouses had died while receiving benefits from MediCal, California’s version of Medicaid.

Pursuant to August, 1993, changes in federal law, states are required to implement an aggressive program to recover assets from the estates of deceased recipients of Medicaid long-term care (known in Arizona as ALTCS). Among the measures already implemented in California is an automatic lien imposed on the residence of MediCal recipients, which may be collected upon the death of a surviving spouse or upon sale of the property.

Arizona has not yet complied with the new federal mandate, though changes are expected at any time. If California’s experience is any guide, seniors who seek ALTCS benefits for their spouses, and the children of ALTCS patients, are in for a surprise.

The Register article told of Edward F. Gunz, whose Parkinson’s disease required his nursing home placement in January, 1993. When he died in October, California authorities placed a $17,287.53 lien against his widow’s home.

Litigation Filed

Gunz’ widow is one of six plaintiffs in a class action seeking to invalidate the California lien program. Another plaintiff is Ralph Ainsworth, whose wife Virginia received $11,700 of MediCal care. When she died last September, Ainsworth received a form inquiring about assets and telling him there would be no lien against his home so long as he lived there. After the lien was filed, MediCal officials explained that he “got an old form” and that the new ones hadn’t been printed up at the time of her death.

Pat McGinnis, director of the California Advocates for Nursing Home Reform in San Francisco, is quoted as saying that “this is just a way to balance California’s budget on the backs of nursing-home residents and their families.” The article also notes that California’s share of long-term care costs is running about $1.5 billion per year. California has about 3 million citizens over age 65.

Other States

According to Linda DeRuvo-Keegan, vice president of American Health Care Association, other states are also taking advantage of the new federal mandate to collect money from estates. She indicates that she is unaware of any other lawsuits.

The California lawsuit alleges only that the surviving spouses were given inadequate notice of the liens, not that the liens are themselves illegal. California authorities are quick to point out that the liens will not be foreclosed so long as a surviving spouse resides in the home. Less clear is how the appreciation in real estate values between the deaths of the first and second spouse will be treated.


Arizona has not yet adopted an estate recovery program, although liens were extensively used by County eligibility offices prior to the enactment of ALTCS. One choice facing Arizona will be whether to use an expanded definition of “estate” authorized by federal law. If followed to the extreme, the new law might permit recovery against the families of patients who only owned a life estate–a right to use the property during the patient’s life.

ALTCS has not been quick to involve family members, lawyers or other advocates for the elderly or disabled in the planning process. We all eagerly await the final outcome.

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