![]() Specifically, in order for nursing facilities to be certified to serve Medicare or Medicaid patients, they must be inspected regularly by state survey agencies in accordance with the Centers for Medicare & Medicaid Services (CMS) guidance. Medicare and Medicaid have a joint responsibility for monitoring the quality and safety of care provided in nursing facilities. For these individuals, Medicare pays for skilled nursing care during the initial portion of their stay and Medicaid pays for subsequent days of care after the Medicare benefit is exhausted, including both skilled care and custodial care without skilled therapy services. In 2019, approximately 84 percent of Medicaid-covered nursing facility residents were dually eligible for Medicare and Medicaid (Abt 2020). Nursing facility FFS payment policies differ on many dimensions, such as the inflation adjustments used in rate setting, how many days Medicaid pays for bed holds due to hospitalization or therapeutic leave, and adjustments made based on resident acuity levels ( MACPAC 2019). States often apply a variety of adjustments and incentives to the base payment ( MACPAC 2019), and there is considerable variation in rates both within and across states. Under fee-for-service (FFS) payment arrangements, state Medicaid programs typically pay nursing facilities a daily rate, called a per diem. Federal rules do not prescribe how nursing facilities should be paid or how much they should be paid, but require that Medicaid payment policies should promote efficiency, economy, quality, access, and safeguard against unnecessary utilization. States have broad flexibility to determine payments to nursing facilities. Although states are increasing access to home- and community-based services (HCBS) as an alternative to institutional care, nursing facilities still accounted for 34 percent of Medicaid spending on long-term services and supports (LTSS) and 10 percent of total Medicaid spending in 2016 ( Eiken et al. In 2016, Medicaid spent $56.7 billion on nursing facility care and was the primary source of coverage for 62 percent of nursing facility residents ( Eiken et al. Nursing facility services are the second-largest category of Medicaid spending (after hospital services), and Medicaid is the primary payer for nursing facility care in the country. Nursing facility services are mandatory benefits that must be covered by all state Medicaid programs. Nursing facilities are institutions certified by a state to offer 24-hour medical and skilled nursing care, rehabilitation, or health-related services to individuals who do not require hospital care.
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