Government Nursing Home Incentives Don’t Always Work as Expected

Medicare covers skilled nursing facility care for millions of Americans each year. Another government program – Medicaid – covers even more nursing home costs than Medicare. These programs provide money to nursing homes to defray patient care costs and promote better lives for residents. However, few people anticipated the adverse effect that government nursing home incentives could have on nursing homes and the patients they serve.

Government Nursing Home Incentives – Basic vs. Ancillary Services

Nursing homes provide a wide range of services, including:

  • Assistance with daily activities,
  • Rehabilitation after surgery or a serious illness, and
  • Skilled 24/7 nursing assistance when needed.

Government nursing home incentives give nursing homes Medicare and Medicaid payments based on the service they provide. For example, facilities typically receive higher daily reimbursements for ancillary services, including rehabilitation care, than for basic services.

“Ancillary services” refers to out-of-the-ordinary assistance, including:

  • Cardiac monitoring,
  • Dialysis,
  • Laboratory services and tests,
  • Orthotics and prosthetics,
  • Wound care,
  • Rehabilitation therapies, and
  • Ventilator care.

Perhaps the government hoped its financial support would improve nursing home residents’ lives and help facility owners stay afloat. However, nursing home incentives lead to some unexpected consequences.

The True Effect on Skilled Nursing Facilities

Not surprisingly, some operators focus on services that provide the most financial return from government nursing home incentives. After all, they need the money to continue operating. However, this financial support potentially shortchanges residents who do not need the higher-reimbursed services.

For example, nursing homes typically promoted rehabilitation services that qualified for higher reimbursements from Medicare. Due to the COVID-19 public health emergency, government incentives for respiratory care increased. Nursing homes adapted to changes implemented by Medicare and Medicaid by offering more respiratory and ventilator care. Patients who did not need these services may have found that some basic care options were restricted or even eliminated.

Government incentive programs affect other areas of nursing care also. For instance, adding skilled nursing staff will not increase most incentives. But increasing the number of physical and respiratory therapists might.

Also, attention transferred to a higher-paying program may detract a nursing home’s attention from other critical care protocols. Residents that bring in less money through government nursing incentives may be overlooked.

Nursing homes often find themselves in the unenviable position of juggling patient care with the pursuit of maximum government nursing home incentives.

Nursing Home Incentives and Nursing Home Care

Programs like Medicare and Medicaid adjust their incentive programs in response to their perception of shifting needs. The nursing home industry then finds itself scrambling to keep up while maintaining standards of patient care. Medicare and Medicaid need to improve their incentives so that they are aligned with the patient’s needs and the nursing home’s need to pay their costs in a reasonable manner.

Attorney Robert Slutsky was one of the first lawyers in Pennsylvania to focus on elder law issues. Since 1992, he has helped countless people successfully apply for Medicaid. Please give us a call at (610) 940-0650 or schedule a consultation on our website. We help clients throughout Chester, Delaware, Montgomery, Bucks, and Philadelphia Counties and beyond.

For a listing of skilled nursing and rehabilitation facilities, please check out our Chester County PA Elder Law Directory and Senior Guide online at:

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