U.S. Department of Health and Human Services

An Analysis of the Impact of Spenddown on Medicaid Expenditures

Executive Summary

Leonard Gruenberg and Hillel Alpert
The Long-Term Care Data Institute

Brian Burwell
SysteMetrics/McGraw-Hill

January 1992

This report was prepared under contract #HHS-100-88-0041 between the U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP) and MEDSTAT Group. For additional information about this subject, you can visit the DALTCP home page at http://aspe.hhs.gov/_/office_specific/daltcp.cfm or contact the office at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, S.W., Washington, D.C. 20201. The e-mail address is: webmaster.DALTCP@hhs.gov. The Project Officer was John Drabek.

The opinions and views expressed in this report are those of the authors. They do not necessarily reflect the views of the Department of Health and Human Services, the contractor or any other funding organization.

The study provides estimates of the impact of spend-down on Medicaid expenditures in Connecticut. It was found that nearly 40 percent of nursing home residents who receive Medicaid originally entered as private-paying patients and ended up on Medicaid after spending down their assets. Also, nearly 40 percent of residents who had entered as private-payers had spent-down by the day of the survey.

In addition to these asset spend-downers, 50 percent of individuals who were Medicaid upon entry to the nursing home became eligible for Medicaid either on the day of their admission to the nursing home, or within one year prior to that date. Many of these individuals were not categorically eligible for Medicaid, but became eligible either because of large medical expenses while in the community, or because their income wasn't enough to pay the nursing home per diem when they entered a nursing home. Taking these individuals into account increases the count of the number of persons who spend down considerably.

Contributions to the payment to nursing homes by Medicaid recipients averaged $343 per month in 1985. These contributions varied and were lowest--$293 per month--for individuals who had not spent down; they were highest--$421 per month--for individuals who had spent down their assets after a period of private payment in the nursing home.

Among nursing home residents, the proportion of Medicaid recipients who had spent-down from private pay status at admission varied with the amount of time the individual had spent in facilities. Among individuals who had only spent 3-4 months in a facility, only 11 percent had spent down. For those who had spent seven or more years, 64 percent had spent down.

The spend-down rates observed in this analysis of a Connecticut resident cohort differed from what was found in analyses of the Connecticut admission cohort. Nursing home residents are two times more likely to have spent down from private pay status than are nursing home admissions. This results from the fact that nursing home residents have significantly longer lengths of stay than do nursing home admissions.