Financing long term care under Medicaid: competitive bidding, vouchers and expenditure matching in an HMO framework

Within the framework of a Long Term Care--HMO, a series of innovative financing mechanisms are proposed to encourage efficiency, reduce cost increases and promote the quality of long term care. Competitive bidding is used to set prices for long term care. Based upon these competitively set prices, HMO enrollees are given long term care vouchers with which to purchase care. Cost savings, arising from choices of care less expensive than the value of the voucher, are shared with the enrollee and the case management team. Incentive payments to this team are made only after a quality of care review. A portion of the payment to the long term care provider is set aside as a quality assurance withhold. If quality of care is inadequate, the withhold is forfeit.