Adequate Medicaid Funding and Payment


Providers of long-term services and supports (LTSS) cannot ensure high-quality services without adequate funding. Several studies suggest that higher Medicaid reimbursements are associated with better resident care. However, providers must demonstrate that reimbursements intended to improve care quality actually serve that purpose. Many LTSS payment systems use a process called case-mix adjustment to link payment levels to beneficiaries’ needs. Case-mix adjustment offers providers an incentive for facilities to accept residents who have heavy care needs and give them appropriate services.

Adequate Medicaid Funding and Payment: Policy

Funding adequacy

In this policy: FederalState

Federal and state governments should ensure that Medicaid reimbursement is adequate to safeguard access to high-quality long-term services and supports, without regard to the intensity or duration of care required.

Medicaid reimbursement should be sufficient to ensure a viable, reasonable choice of services, settings, and providers, including home- and community-based services and a self-directed option with necessary supports.

Medicaid funding should provide specific and adequate reimbursement for services and care coordination, and contain no caps on reasonable and necessary services or eligibility.

Linking reimbursement to level of disability

In this policy: FederalState

Payments for home and institutional services should be adjusted for the resources required to provide appropriate services to people with varying levels of disability.

Financial incentives (e.g., the use of prospective case-mix reimbursement systems that link payment to the intensity of services provided) should be adequate to encourage providers to care for all clients, particularly those with heavy care needs.

Reimbursement systems not using case-mix adjustment should have other mechanisms to encourage providers to accept residents with heavy care needs.

Establish additional rate-setting measures for cases with extraordinary costs that are outside the normal range.

Reimbursement methods should include incentives for rehabilitating and restoring residents to the highest possible level of functioning.

Reimbursement systems should be structured to recognize the link between financing and quality, and provide incentives to deliver high-quality care.

Consumer protection

In this policy: FederalState

Federal and state governments should ensure that nursing facility residents actually receive all services for which payment is made.

Contracts for nursing facility admission should define Medicaid-covered services so that facilities deliver appropriate services and do not overcharge residents by billing their personal funds for items or services covered by Medicaid.

Regulatory agencies should retain copies of facilities’ contract forms, which should be available to the public.

Funding should be specific and adequate for creating and maintaining an effective state oversight infrastructure.