Medicare vs Medicaid Funding: Two Classes of Skilled Nursing Facilities?

Recently, Rachel M Werner, MD, PhD, and her colleagues published a study examining the trends in postacute care in the United States from 2001-2017. The researchers concluded that the majority of Medicare-reimbursed postacute services have been concentrated in a subset of facilities which are for-profit, part of a chain, and less likely to provide services to minority populations. In essence, there is a two-class system of care for nursing home residents which relegates racial and ethnic minorities to long-term care facilities with fewer resources since most of their funding comes from Medicaid, while Medicare funding provides ongoing support for the facilities that are relatively stable.

In my own practice, I spend several hours per week in an urban facility where 92% of the residents receive Medicaid funding. There is stiff competition from all providers in the city for the true subacute resident, but despite having a fully staffed rehabilitation department, few subacute residents are referred for admission.

In addition, long-term care facilities with fewer than three stars on the Medicare.gov/care-compare website may be ineligible to enter into contracts with commercial insurers for residents. In Philadelphia, for example, the Medicare website identified 51 providers, of which 8 had four-star ratings and only 6 had five-star ratings. Eleven of the providers were rated as three-star facilities. Fifteen of the county’s providers had two stars, and 11 were rated as one-star. A full 26 of 51 providers with ratings below three stars were unable to engage in contracts with commercial insurers to offset the high proportion of Medicaid reimbursements.

Poorly funded facilities face a perpetual cycle of being unable to access sufficient resources to improve their quality indicators, staffing, and survey results, the same factors that limit their ability to demonstrate quality with the five-star rating system.

How can this cycle be broken in order to give all residents access to high-quality long-term care services?

Should we accept that facilities with high proportions of Medicaid residents, particularly those with large minority populations, will continue to have poorer quality ratings?

Is a two-class system of long-term care acceptable?

Reference:
Werner RM, Templeton Z, Apathy N, Skira MM, Konetzka RT. Trends in post-acute care in US nursing homes: 2001-2017. J Am Med Dir Assoc. 2021;22(12):2491-2495.e2. doi:10.1016/j.jamda.2021.06.015