U.S. Department of Health and Human Services

Medicaid-Financed Nursing Home Services: Characteristics of People Served and Their Patterns of Care, 2001-2002

Executive Summary

Audra T. Wenzlow, Robert Schmitz and Jill Gurvey

Mathematica Policy Research, Inc.

January 30, 2008

This report was prepared under contract #HHS-100-97-0013 between the U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP) and Mathematica Policy Research, Inc. 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 ASPE Project Officer, John Drabek, at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, S.W., Washington, D.C. 20201. His e-mail address is: John.Drabek@hhs.gov.

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.

Although Medicaid expenditures for nursing home care are well-documented, little is known about the characteristics of people who use nursing home services. All Medicaid enrollees who reside in nursing homes must meet Medicaid income and asset requirements but pathways to Medicaid eligibility can vary greatly. Some have always had low incomes and are long-term Medicaid enrollees. Others may have met the financial and clinical eligibility criteria for Medicaid after depleting their assets while in a nursing home. Nursing home users can also vary by age, disability status, and other characteristics. As policymakers are considering community-based service programs as alternatives to nursing home care, and debating strategies for securing long-term care insurance for larger subsets of the population, greater knowledge of nursing home utilization in Medicaid--the largest insurer of nursing home care--would provide timely information about those who could potentially benefit from alternative forms of care and new long-term care financing strategies.

Past studies based on the National Nursing Home Survey have provided some insight into characteristics of Medicaid nursing home users and patterns of their Medicaid utilization nationally. However, most of these studies were conducted during the 1980s and 1990s and national averages provide little information about how nursing facilities are utilized across the country in Medicaid programs that vary substantially across states. The Medicaid Analytic eXtract (MAX) data system now enables detailed examination of Medicaid nursing home use not just nationally, but for every state and the District of Columbia. This study capitalizes on the enrollment and claims-level information in MAX to characterize people starting new spells of nursing home use, examine how they became eligible for Medicaid nursing home services, and summarize the number and duration of their spells. We examine Medicaid eligibility codes prior to nursing home spells to distinguish new enrollees from persons who were already enrolled in Medicaid at the start of their spell. By comparing the first Medicaid payment date with the nursing home admission date, we are able to distinguish those who may have spent down their assets to become Medicaid eligible from those who were on Medicaid when they were admitted.

Our examination of enrollees beginning spells of Medicaid-financed nursing facility service use between July 1, 2001 and December 31, 2002 in 46 states suggests that:

• Almost 46 percent of all nursing home users had new spells of nursing home care paid in part by Medicaid during the 18-month period of observation. That almost half of the people utilizing any Medicaid nursing facility services were observed at onset of a new Medicaid-covered spell suggests that there is considerable transition in and out of Medicaid nursing home care--due to death, extended hospital stays, Medicare-covered acute care stays, limited need, or availability of community-based services--over time.

• The primary eligibility pathways for Medicaid-covered nursing home care nationwide were through the long-term care associated eligibility criteria, which include people qualifying under the 300 percent rule. Almost 48 percent qualified under this long-term care associated eligibility group, 23 percent qualified as a result of Supplemental Security Income receipt, 22 percent qualified under medically needy provisions, and 6 percent qualified under their state’s poverty criteria.

• About 64 percent of enrollees with new nursing home spells were already enrolled in Medicaid at the start of their spell whereas 36 percent were new enrollees. The percentage who were new enrollees ranged from 56 percent in New Hampshire to just 17 percent in North Carolina. Those newly enrolled in Medicaid typically qualified for coverage under long-term care associated eligibility criteria (58 percent) or as medically needy (29 percent). We estimate that almost half of new enrollees were already in a nursing home prior to their spell start, most likely because they entered as Medicare skilled nursing facility residents or spent down their savings while institutionalized to become Medicaid eligible.

• Over half of enrollees beginning Medicaid-financed nursing home spells were already residing in nursing homes when Medicaid began financing part of their stay: 29 percent for 1-6 months, 5 percent for 7-12 months, 7 percent for 13-24 months, and 9 percent for over 2 years.

• Almost 15 percent of enrollees beginning nursing home spells had more than one spell and almost 2 percent had three or more spells during the observation period. The duration of spells was bimodal, indicating that two distinct types of people utilized Medicaid-covered nursing home care: those needing care for acute conditions and those requiring longer term care.

• Duration of nursing home spells was negatively associated with availability of community-based services in a state. Oregon, a state with an extensive community-based waiver program, had the smallest percentage of enrollees with spells lasting longer than a year. States with significant community-based programs tended to have a higher percentage of people using community-based services before entering nursing homes.

Summary information about the number of people using Medicaid services, their demographic and eligibility characteristics, how they became eligible for Medicaid, and their patterns of care are provided at state-level detail in the tables of this report.

The breadth of information available in the MAX data system enables far more detailed analyses than could be presented in this report. In this report we focus on characterizing people utilizing services. Several particularly interesting avenues for future research include: an examination of nursing home stays to gain better understanding of how people utilize nursing homes over time; research on patterns of Medicaid expenditures to gain insight into potentially more or less costly service patterns; tracking of nursing home expenditures, rate of utilization, and intensity of utilization over time to better understand expenditure trends; and finally, studies of the effects of state policies, particularly options provided to enrollees for community-based long-term care, on patterns of nursing home utilization among the aged and disabled. Each of these analyses is possible using the data available in MAX.