Creating an efficient market for nursing home care

Area of Science:

• Health Economics
• Public Policy
• Healthcare Management

Background:

• Medicaid nursing home reimbursement systems face theoretical challenges.
• Existing systems include reasonable cost related, fixed rate, and negotiated rate models.
• These systems are evaluated against allocative efficiency, care appropriateness, quality, and economic equity.

Purpose of the Study:

• To review theoretical foundations of Medicaid nursing home reimbursement.
• To analyze common reimbursement systems based on design goals.
• To propose an alternative system for improved efficiency.

Main Methods:

• Theoretical review of existing reimbursement models.
• Analysis of four key reimbursement system design goals.
• Development of a mathematical programming model for a new system.

Main Results:

• No theoretical deficiencies found in current reimbursement approaches.
• Significant practical implementation challenges exist for current systems.
• A competitive bidding system is proposed as a viable alternative.

Conclusions:

• Current Medicaid reimbursement systems present practical implementation difficulties.
• A competitive bidding system offers a potential solution for efficient fund allocation.
• Mathematical programming can process bids and allocate Medicaid funds effectively.