New Medicaid Study: Underfunding of Seniors’ Long Term Care Undermines Medicare Stability

WASHINGTON, Oct. 3 /PRNewswire-USNewswire/ — A new independent analysis of the nation’s Medicaid program by the accounting firms BDO Seidman/Eljay, LLC estimates states are underfunding the actual cost of providing seniors’ critical nursing home care by at least $4.4 billion annually, or, $13.15 per patient day — representing a dramatic 45% increase from 1999 through 2007. The new study also found that the states with the greatest disparity between the actual cost of providing quality care and Medicaid reimbursements are, in order of severity, Illinois, New Jersey, Wisconsin, Minnesota, Vermont, New Hampshire, Missouri, Delaware, Washington and Massachusetts.


In releasing the new report at a Capitol Hill briefing on pending FY 2008 health and budget issues, David Hebert of the American Health Care Association said it is essential for policymakers, key legislative staff and all long term care stakeholders to understand the growing inter-dependence between Medicaid and Medicare – and how according to the study’s findings, the long term care sector operates at a 2.5% negative margin when factoring both Medicare and Medicaid funding into the overall long term care financing equation. “As federal and state lawmakers consider cuts or freezes in either Medicare or Medicaid the significance of the overall negative operating margin cannot be discounted,” the AHCA President and CEO said. “These findings are further evidence that policymakers and the Medicare Payment Advisory Commission should take into account the symbiotic nature of Medicaid and Medicare financing as key healthcare funding decisions are made.”


“The federal government has a moral responsibility to cover at least the overhead costs of caring for those who are most in need. The federal government’s practice of passing the buck must come to an end — right here and right now. At stake is the continued existence of high quality care for our senior citizens and disabled American citizens,” stated U.S. Representative Steve Kagen (D-WI-8) at the Hill briefing.


The largest payer for long term care in the nation, nearly two-thirds of skilled nursing facility patients rely on Medicaid to pay for their care and services. Each state sets a daily care reimbursement rate ostensibly tied to the “allowable costs” of providing care in that state — costs such as 24-hour nursing care; three meals per day with important dietary supplements; critical medical services; assistance with activities of daily living; essential medical equipment; social activities, and more.


According to the BDO Seidman/Eljay analysis, seniors’ Medicaid-financed long term care needs suffer the highest cost/reimbursement rate disparities in the following states:

  Rank         State                  Per Patient Daily Shortfall

1 Illinois $30.21

2 New Jersey $28.64

3 Wisconsin $27.29

4 Minnesota $24.96

5 Vermont $24.32

6 New Hampshire $22.99

7 Missouri $22.62

8 Delaware $22.21

9 Washington $20.71

10 Massachusetts $19.85

National Average Shortfall $13.15


The study also notes: According to the Medicare Payment Advisory Commission, the average margin on Medicare payment to nursing homes in 2005 is 13 percent, while the BDO Seidman/Eljay analysis indicates a 9.2 percent shortfall on Medicaid payment for that year. The weighted average 2005 margin from the two government funded programs combined is a negative 2.5%.


To obtain the methodology or for a full copy of the report, please contact Susan Feeney at [email protected]


First Call Analyst:
FCMN Contact:


Source: American Health Care Association