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Medicaid Underpays Nursing Homes By $9 Per Patient Day

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A new study commissioned by the American Health Care Association confirms what most senior advocates have long suspected: funding for long-term care services (and particularly nursing home care) is insufficient to pay the actual cost of care. While there is significant variation among the states, the federal-state Medicaid partnership program underpays providers by more than $3 billion each year.

The AHCA study was actually completed by accounting firm BDO Seidman, based on data collected from individual state Medicaid agencies. Arizona’s AHCCCS program failed to respond to the study, but 36 states did provide information from which the accounting firm could determine rough national figures for the Medicaid underpayment.

Most analysts agree that slightly less than half of all 65-year-olds can expect to spend at least some portion of the rest of their lives in a nursing home, so the payment system for nursing home care is important to a large portion of the senior population. A majority of nursing home residents (over 67% nationally and 63% in Arizona) receive Medicaid benefits, making the program’s reimbursement rates critically important for ensuring future quality in long-term care facilities.

The AHCA study looked at 1999 reimbursement rates for the 36 states providing data. On average, Medicaid’s shortfall was a little more than $9 for each day a Medicaid patient spent in the nursing home; with just over a million Medicaid patients in nursing homes nationwide on any given day, the annual shortfall exceeds $3.3 billion nationwide.

New Jersey and New York showed the largest shortfall per patient and total shortfall, respectively. Alabama was the only state which paid more in Medicaid benefits than the cost of patient care; its reimbursement of $102.78 per Medicaid patient day was actually $2.48 more than the facility’s costs.

Although most states in the West (notably Nevada, Oregon, and Utah) underpaid by more than the national average, Colorado, California and New Mexico helped keep the region’s average underpayment lower than the national figure. The South (including Texas, Alabama and Virginia, three of the states with the lowest underpayment rates) demonstrated regional rates closest to the allowable Medicaid costs—despite including Florida, one of the least generous states. Underpayments in the Northeast exceeded the national average in every state except Connecticut and West Virginia. The average shortfall for states in the Midwest was almost identical to (and slightly below) the national average shortfall.

The AHCA website ( contains more detail about the study as well as other statistical details.

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Robert B. Fleming


Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

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Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

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Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

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Matthew M. Mansour


Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.