Medicare Part A payments have exploded, more than doubling to $9 billion in fiscal year 1995 from $3.7 billion in fiscal year 1992.

At the same time, beneficiaries ballooned to 1.2 million in 1996, from 779,000 in 1992. Along with home health services, this is one of the two fastest growing components of the Medicare program.

How does Medicaid Work In Nursing Homes?

Medicaid exists to help low income families and individuals and provides nursing home care for this group. Although eligibility requirements vary by state, Medicaid provides skilled and long term care but only in Medicaid-certified homes.

However it will provide care in intermediate care facilities as well. In the year 1996, Medicaid was footing the nursing home bill for 1.7 million individuals. Medicare Part B

Medicare Part B covers mostly medical supplies and services, doctor services, including services like wound care, lab services and psychotherapy.

How much does it pay? Typically the patient pays a once per year $100 deductible. Above and beyond that, Medicare Part B will pick up 80 percent of an approved amount based on a fee schedule, reasonable cost or charge. And if the beneficiary can’t pay the remaining 20%, Medicaid will pick up that amount. In 1995, Medicare Part B payments for both Medicare and Medicaid came to $4 billion for nursing home residents.

System Weaknesses

Grob pointed out that the most exposed and vulnerable members in this whole system are nursing home residents themselves. He claimed that many care practices and service delivery are often based as much on financial incentives as actual medical need.

He pointed out to another inherent point of abuse under Medicare Part B: supplies and services furnished to a nursing home are often billed by an outside entity rather than the home itself. In this setting, the home itself may have little oversight or control for the quantity or quality of these goods and services.

He cited wound care, as an example. Government inquiries found that questionable payments for wound care supplies may have contributed to as much as two-thirds of the $98 million in Medicare allowances from June 1994 through February 1995.

In one particularly absurd case, a patient was charged over $5,000 over six months for tape for wound care. This amounts to over ten miles of one-inch tape.

Similarly, another patient was billed for almost $12,000 for hydrogel wound filler, 99% of which was likely unnecessary.

As a sign of just how lucrative this class of supplies is, Grob’s reported that they found that 13 percent of nursing homes were offered financial incentives to allow wound care suppliers the contracts to supply their homes.