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Private Pay & Reimbursement
The Myth of Private Pay
Many nursing home operators prefer private-pay clients because billing the family is relatively easy. Yet, less than one quarter (24%) of the nation's nursing home residents are private pay, according to the American Health Care Association (AHCA). Because these patients typically can afford only the first year, 55% of them impoverish themselves within a year to continue care. Under Medicaid, total average stays are 2.3 years, according to the U.S Senate Special Committee on Aging.
It's not hard to understand why this happens. For patients with extensive medical needs, costs can zoom from $4,000 monthly to $40,000 monthly. Most families are hard pressed to afford a bill of this size for more than a few months. Often, nursing home operators stand by helplessly as families go into arrears and accounts payable stretch to 180 days or more, negatively impacting revenues and operations.
By comparison, 69% of all those in nursing homes are under Medicaid, another 7% are on Medicare and 3% are on long-term care insurance. Thus, Medicaid, by default, has become the nation's largest funder of long-term care. It makes good business sense, therefore, for nursing home owners to learn more about Medicaid and stop chasing after private-pay patients, more than half of whom end up on Medicaid in the end.
The Myth of Partial Reimbursement
Many operators also seek private-pay patients because they want total reimbursement for costs and often believe Medi-Cal only partially reimburses. But the truth is that, once a patient is approved for care, Medicaid pays 100 cents on the dollar for patient needs while in the facility.
This includes medications, speech and physical therapy, personal items such as diapers and equipment such as specialized beds. Reimbursement continues for as long as the patient needs care.
Ask the Expert
Dear Expert:
My parent's are on a fixed income, they can barely meet their monthly bills. They continue to pay Long-Term Care insurance at a cost of $650.00 a month. Is this wise?
— Inquisitive in Indio
Dear Inquisitive in Indio
You've identified the primary Long-Term Care Insurance defects - the monthly cost to the insured. When people retire, they are reduced to a fixed monthly income and they can no longer afford the payments. Once they apply for these benefits, they learn that there is a limit on what is paid and for how long! Your parents need to "cut their losses"!
"And in the end it’s not the years in your life that count. It’s the life in your years!"
— Abraham Lincoln
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