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Financing and Reimbursing Financing is the mechanism by which nursing home clients pay for the services. Payers determine the method and amount of reimbursement, except for private-pay rates that are established by the facility. Private ±nancing includes out-of-pocket payment for services and coverage under private long-term care insurance. Several factors should be taken into account in establishing private- pay rates. Medicare is a federal program that is uniform across the United States. It covers three categories of people. Services for eligible people in a Medicare-cerT±ed skilled nursing facility (SNF) are covered under Part A on a postacute basis and are limited to a maximum of 100 days. Medicare Part B does not pay for skilled nursing care, but certain services are covered while the paTent is in a long-term care facility. Bene±ciaries enrolled in Part C obtain all health care services, including skilled nursing care, through a managed care plan. Medicare reimburses cerT±ed nursing homes according to a case-mix-based prospecTve payment system. Assessment plays a criTcal role in determining a facility’s case mix. Medicaid is a welfare program for the indigent. ²hose who have assets must spend down to the state-established threshold levels to qualify. Unlike Medicare, the program varies from state to state. Medicaid has no limit on the number of days a person may stay in a nursing facility. ²he PACE program aims to provide long-term care in community se³ngs to those who risk being placed in a nursing home. Money is pooled from Medicare, Medicaid, and private sources to provide a capitated rate to the PACE organizaTon. Managed care organizaTons are acTve players in Medicaid and Medicare. Reimbursement is based on capitaTon. ²he nursing facility must manage the cost of providing services within the capitaTon amount. ²he A´ordable Care Act is driving changes within the health care system, which will require collaboraTons between hospitals and postacute providers. ContracTng with the Veterans Health AdministraTon (VHA) also provides opportunites to nursing homes. Fraud and abuse is prosecutable under the Health Insurance Portability and Accountability Act (HIPAA) and the False Claims Act. ²he A´ordable Care Act has boosted the government’s
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eforts to prosecute Fraud. The ±alse Claims Act includes the qui tam provision that encourages whistleblowers to conFront Fraud and abuse through the legal system. Financing and reimbursement are criTcal for sustaining internal facility operaTons. Research shows that reimbursement has rami±caTons for nursing home quality. For example, Mor and colleagues (2011) found that increases in Medicaid payment to nursing homes have achieved improvements in some measures of clinical quality. For the most part, health care ±nancing is governed by external factors, notably poliTcs, social changes, the economy, compeTTon, and changes in the broader health care delivery system. Much of the informaTon covered in this chapter is of value to more than just nursing home corporaTons and administrators. Social workers and paTent accounts managers should also have a clear understanding of ±nancing so they can furnish advice and assistance to current and prospecTve paTents, families, and the community. Department heads involved in quality of care must become familiar with the fraud and abuse laws, which are increasingly a²ecTng nursing home ±nances when heavy penalTes are imposed for delivering substandard quality of care. Financing is the means by which paTents receiving services in nursing faciliTes pay for those services. InsTtuTonal L³C is expensive. According to research by the Mature Market InsTtute of MetLife (2013), the naTonal average cost for a private room in a nursing home in 2012 was $248 per day ($687 in Alaska); it was $222 for a semiprivate room ($682 in Alaska). ³he monthly base rate in an assisted living facility was $3,550 ($5,933 in Washington, DC and $5,800 in Alaska). Few paTents or their families can a²ord such costs if they pay with their own funds. Although individual L³C insurance has grown, it is not widely popular. Hence, public ±nancing, mainly Medicaid and Medicare, remains the predominant source of ±nancing nursing home care. Sources of ±nancing for nursing home care are illustrated in Figure 6–1. ³rends in nursing home ±nancing show that people’s ability to pay for L³C from private sources has declined. In 1990, private sources of payment ±nanced almost 50% of nursing home care naTonwide. By 2000, the proporTon of total private payments declined to 43%. Recently, private payments have accounted for roughly 37% of nursing home costs; the remainder is paid through public sources. ±igure 6-1 Sources of Financing Nursing Home Care (Nonhospital-based faciliTes), 2010 Medicaid 31.5% Out oF pocket 28.3% Medicare 22.3% Private insurance 8.9% Other 9% Reimbursement covers two aspects of ±nancing: (1) the method used by a payer to determine the amount of payment and (2) the amount that is actually paid to a facility on behalf of a
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Hilda Smith, who had osteoporosis, sustained a hip fracture because of a fall in her home. AFer 5 nights in an acute care hospital, she is admiTed to a SN± where she spends 16 days for rehabilita²on, nursing care, and assistance with ADLs. ³he pa²ent is then discharged to her own home where a physical therapist from a home health agency comes in to train her to use a walker and build strength. AFer being at home for 25 days, Mrs. Smith develops deep venous thrombosis (blood clot in a vein) in her thigh (related to her fall) and is admiTed to the hospital, from where she is transferred to a SN± aFer spending 2 nights in the hospital. Assuming that Mrs. Smith meets Medicare criteria for the services described here, how many days of SN± care is Mrs. Smith en²tled to during her most recent stay (assume that she quali´es for the full 100 days)? Explain. How much in deduc²bles and copayments does Mrs. Smith have to pay (use 2014 ´gures given in the text)?Explain.
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