Medicare Compliance & Reimbursement

Private pay may be the next wave for the industry.

Long-term care providers that serve only Medicare and Medicaid patients may want to start rethinking their business models, because federal LTC reimbursement is not likely to expand - even as the number of Americans needing the care will explode over the next 10 years.

Centers for Medicare and Medicaid Services Administrator Mark McClellan announced the second phase of a campaign to help states promote private long-term care financing alternatives to Medicaid on July 26. "Medicare doesn't cover long-term care, and Medicaid cannot afford to be the nation's primary source of payment" for LTC providers, McClellan says.

The demonstration's first phase began with five states (Arkansas, Idaho, New Jersey, Nevada and Virginia) in January 2005. CMS helped participating state governors initiate an aggressive outreach campaign to individuals from 50 to 70 years of age.

Governors sent letters and financial planning toolkits to older adults containing information about using personal savings, trusts, annuities, LTC insurance and reverse mortgages to plan for LTC needs.

The second phase will last from January to May 2006. CMS will choose 10 states competitively and contribute $2.5 million to the demonstration.