Observations from the Front Lines: The State Can Save Money and Provide Good Care

Gracemarie Tomaselli and Joyce Tomaselli
Medicaid Specialists

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Case Study

Domenica was 100 years old and lived at home when she fell. She thought she was being “temporarily” admitted to a hospital and then a nursing home for rehabilitation. However, as the months passed, her family was told that since she was in a nursing home, she would not be returning to her apartment. The family gave away all the woman’s personal belongings, furniture, etc., and vacated the apartment.

Domenica was institutionalized in December 2001. She told us that she felt like “a prisoner.” She begged us to help her “to go home.” She was able to walk with a walker and was mentally stable. We interceded on her behalf. After evaluations, the woman was discharged, and in December 2002, she was relocated to an assisted living facility. She happily celebrated her 101st birthday in this new home.

The cost savings to the state from moving this one woman out of a nursing home into assisted living amounts to just over $1,500 per month for a total of more than $18,200 per year.

Medicaid paid $2,972.68 on average per month to the nursing home, while the state paid the assisted living facility $297.84 through Supplemental Security Income (SSI) and $1,157.66 on average per month through Group Adult Foster Care (GAFC) for a total of $1,455.50—just under half the Medicaid nursing home cost.


In our experience, many elderly and disabled individuals languish unnecessarily in nursing homes in Massachusetts. Nursing homes, which provide 24-hour skilled nursing care, are far more costly than assisted living facilities, rest homes, or home-based living with support services (see Glossary of Terms, next page). More than two-thirds of nursing home patient days are paid for by Medicaid in Massachusetts.1

For patients who do not require intensive medical treatment and can benefit from social activities, a nursing home is not the best placement. Staff are primarily skilled nurses, and programming focuses on maintenance and medical needs with some limited activities.

Some elderly and disabled patients are institutionalized prematurely; some become permanent residents even though at some point they could have been moved to a less restrictive and less costly care setting. Among such settings are home-based care with support services, assisted living, and rest homes. The benefits of less restrictive care settings include more privacy and opportunities to participate in health-promoting activities.

There are various scenarios that can lead to premature or unnecessary permanent admission to an institutional long-term care facility:

  1. Like Domenica, a patient is injured or seriously ill and requires rehabilitation. Once rehabilitation is completed, the patient is still not able to live independently. Even though relocation to an assisted living facility or rest home or returning home with support are all available options, the person stays in a nursing home with no clear plan for ever being released.
    Once an individual is on Medicaid, his or her income, less allowable deductions, goes to the nursing home to help pay for the care. For the first six months after admission, the resident is allowed to maintain his or her home. Medicaid allows a “maintenance of the home deduction.” This allowance is deducted from the resident’s income, which lowers his or her payment to the nursing home. After the six-month period has passed, Medicaid policy no longer permits the home deduction. Residents often lose their homes as a result.
    Lack of physical activity while in a nursing home may halt or reverse the patient’s progress toward regaining mobility and strength. In cases where patients are still mentally healthy, the nursing home environment often cannot offer sufficient stimulation.
  2. A disabled or elderly individual lives at home and is cared for primarily by a family member. Over time, the patient’s needs increase steadily until the caregiver has given up all personal time and pursuits. If the caregiver continues to be employed, all non-work time must be spent caring for the relative. In some cases, the caregiver must give up his or her job and be available 24 hours a day, 7 days a week, to care for the family member. The caregiver experiences “burnout” and makes the difficult decision to turn over all care to an institutional facility.
    Caregiver burnout is a leading cause of premature admission to long-term care facilities. In cases where patients are eligible for public assistance, premature admission significantly increases public costs.2


  • Keep Patients in Their Homes Longer

Among the strategies for keeping people in their homes longer are easing the burden on family caregivers and expanding home and community-based care options.

Even those who can afford to pay for alternative care by elder sitters or at adult care facilities find a lack of supply. It is often difficult to find an appropriate elder-sitter for a few hours. It is very costly to hire a home care aide to elder-sit in the home. Many caregivers and the elderly do not like to open their homes to a stranger.

The few day care facilities that provide care for seniors and the disabled are generally open for limited number of hours during the day. Senior centers and adult day centers are usually open Monday through Friday or Saturday from 7:30 AM to 4:00 PM. While these hours may make it possible for a family caregiver to continue employment, evening, occasional overnight, and weekend respite care are all but impossible to find.

Hospitals, nursing homes, and assisted living facilities have 24-hour staffing and often have function rooms or large lobby areas that might be used for evening programs. Facilities with excess capacity might consider offering temporary overnight and/or weekend elder care with limited services for a fee. The state should consider providing subsidies and/or other incentives to adult day centers to expand hours and to other elder care facilities to expand programming. Caregivers should be encouraged to use available programs to keep the spouse, parent, or other relative home.

Providing reimbursement for evening, weekend day, and occasional overnight care could significantly delay or even prevent admission of Medicaid-eligible individuals to a longterm care facility. If it is the case that caregiver burnout results in seniors and the disabled being institutionalized sooner, then even broadening eligibility for temporary (night, overnight, weekend, vacation, etc.) or occasional care might result in savings. Reimbursements for this short-term respite care could be made affordable using a sliding scale fee schedule based on the elderly or disabled person’s income, not on the caregiver’s income.

Even if some individuals took advantage of subsidies who would not have otherwise entered a nursing home, the state should save money. For those who are not eligible for Medicaid due to excess income and might consider “spending down” to become eligible, these expanded options might provide another avenue for accessing needed care. Massachusetts should continue existing efforts to expand home-based and communitybased care.3

  • Emphasize Prevention and Long-Term Health

Studies show that regular exercise and mental activity play a key role in keeping seniors healthier longer. Lengthening the period of rehabilitation for seniors who have been injured or ill can enable them to regain strength and mobility and avoid the postrehabilitation stays in nursing homes that often become permanent. Rehabilitation services can be and often are provided in assisted living and rest home environments. This less costly placement can lead to a healthier outcome than long-term residency in a nursing home.

The goal of the service structure for seniors and the disabled should be the least restrictive environment that can provide the care the individual needs. Defaulting to the highest level of care with the highest cost (i.e., nursing home care) often leads to the lowest quality of life because nursing home care focuses on medical needs and not healthretaining activity. Ongoing, appropriate exercise programs in the morning and afternoon and varied activities throughout the day should be considered essential to maintaining health, and residents should be encouraged to participate whenever possible. Keeping elders moving and agile can be done with group walks, yoga, dancing, ping pong, swimming, games, etc.

The state should resist cutting medical services for the disabled and the elderly when faced with budget constraints. While the state appears to save money initially by eliminating certain services for MassHealth clients, if the client’s health deteriorates and then he or she requires hospitalization, specialized services, or skilled nursing home care, the costs increase significantly later.

  • Redetermine Need Every Six Months

Policies should recognize that care needs change. Patients should be reevaluated frequently to confirm the continued need for 24-hour nursing care. Less restrictive options should be available for every patient, whether paying privately or supported by public funding. There is a tendency to assume that once an individual is admitted into a nursing home, he or she will die there. Often no one tries to discharge a nursing home patient because they are not aware that discharge to home, assisted living, or a rest home is a possibility. State policies should support moves to less restrictive care settings if feasible, recognizing that a non-institutional facility can provide a higher quality of life for many patients and that it is a cost-effective alternative for the state.

Currently, after six months of Medicaid-supported residence in a nursing home, the home allowance deduction expires. Medicaid should extend the home maintenance allowance if case progress evaluations indicate that discharge is a possibility. Currently, “this income deduction terminates at the end of the sixth month of admission regardless of the prognosis to return home at that time.”4

  • Continue Efforts to Educate the Public About Care Options for the Disabled and the Elderly

Efforts should be made to increase public awareness that there is financial and medical assistance available for people who are in need of adult day care or are ready for some type of support in their daily lives. People need to know there are options and that permanent nursing home institutionalization should be the last resort. Some assisted living facilities and rest homes accept persons with Alzheimer’s disease, dementia, and some physical limitations. Information on public funding for various types of care5 should be provided to families and to others who advocate for elders and the disabled. Any funding made available for respite care should be described in language that is easy for the public to understand, such as “time off” for caregivers. Respite care may be covered by Medicaid or used toward the Medicaid deductible (“spend-down”).

Everyone should be aware that health insurance is an allowable income deduction for Medicaid, the Emergency Aid to the Elderly, Disabled and Children program (EAEDC), and most government programs. Persons applying for or receiving Medicaid, EAEDC, etc., should be encouraged to maintain their health insurance coverage to offset the high cost of medical expenses for the state.

As people live healthier longer, there is increasing need for a full spectrum of living options. Physicians and caregivers need to be aware of the differences between nursing homes, rest homes, and assisted living facilities.

Nursing homes might consider developing assisted living sections. Residents would need less medical attention, enjoy more privacy, and have greater access to activities, such as exercise classes, social events, etc. Such assisted living sections could be open to public paying as well as private paying residents for eligible community elders or the disabled. These facilities might also offer temporary overnight stays, when needed.


Avoiding premature and unnecessary permanent institutionalization would benefit patients, caregivers, and the state. The elderly and disabled, regardless of income, should be afforded every opportunity to participate in community life, whether by living at home or in supportive housing.

Providing a range of care options would at least postpone and could often eliminate the need to fund long-term nursing home care for many seniors. The cost of supporting expanded hours at adult day care centers and temporary care at other facilities would be far less than long-term institutional care.

State policies should encourage family caregivers to keep their loved ones at home but should also acknowledge the causes and public costs of caregiver burnout. Expanding programs to ease the burden on family caregivers would have significant benefits:

  • Elderly will not be permanently institutionalized due to caregiver burnout.
  • The elderly will have a better quality of life for as long as possible.
  • The state would save money because less restrictive settings are also less expensive.

State policies should emphasize prevention and long-term health by supporting care options that keep elders active. Supporting longer rehabilitation periods in rehabilitation centers and/or short-term stays in nursing homes with expanded, ongoing rehabilitation services could avoid permanent institutionalization in long-term care facility and save the state money in the long run.

The state and society as a whole should not give up so easily on the elderly. The trend is for people to live active, healthy lives longer. The marketplace is steadily increasing the housing options available to seniors. State policy should recognize the value to the individual, the community, and the state budget of care settings, such as assisted living and rest homes, that afford greater autonomy, privacy, and dignity than the traditional hospital-style nursing home setting. Massachusetts should take a look at ways other states and even facilities in our own state have found to expand options for the elderly and disabled.


  • The American Association of Retired Persons supports research on a wide range of topics of importance to older Americans. http://www.aarp.org/research
  • The Massachusetts Assisted Living Facilities Association (Mass-ALFA) is a non-profit association devoted to supporting the establishment and operation of quality assisted living residences in Massachusetts that provide appropriate supportive housing and services for individuals with varied needs and income levels. http://www.massalfa.org
  • The Division of Health Care Finance and Policy, a state agency within the Executive Office of Health and Human Services, can be a source of information on rest homes. http://www.state.ma.us/dhcfp

About the Authors

Gracemarie Tomaselli is a retired state policy, Medicaid, and systems trainer. Ms. Tomaselli has been involved in the Massachusetts Medicaid program since its inception. She currently operates Brighter Connections, a business specializing in assisting people with Medicaid, SSI, EAEDC, and other public support programs.

Joyce Tomaselli is a retired senior social worker. Ms. Tomaselli has been involved in the Massachusetts Medicaid program as well as financial assistance and work training programs. She currently operates Brighter Connections, a business specializing in assisting people with Medicaid, SSI, EAEDC, and other public support programs.

  1. In 2001, monthly charges for private paying residents in nursing homes in Massachusetts were $6,700. The monthly cost of assisted living residences ranged from $1,900 to $5,000 per month; the average one-bedroom unit cost $3,200 per month. As of 2001, Medicaid paid for 70 percent of nursing home patient care days in Massachusetts. Massachusetts Division of Health Care Finance and Policy, Healthpoint, No. 22, July 2001, p. 2.
  2. The Division of Health Care Finance and Policy newsletter explains the funding rules: “Massachusetts state law prohibits assisted living facilities from admitting any resident who requires twenty-four hour skilled nursing supervision, unless a certified home health agency provides the care, but such supervision generally may not exceed more than ninety days a year.” “The Group Adult Foster Care Program administered by the Massachusetts Division of Medical Assistance covers a portion of the costs [of assisted living] for some lower-income residents. In addition, there is a specific category of Supplemental Security Income (SSI) that covers the room and board expenses for eligible residents,” Ibid., endnotes 5 and 6, p. 4.
  3. Studies by the American Association of Retired Persons (AARP) and the General Accounting Office (GAO) concluded the expansion of home and community-based services was a cost-effective alternative to institutional care. Lisa Maria B. Alecxih, Steven Lutzky, and John Corea, Estimated Savings from the Use of Home and Community- Based Alternatives to Nursing Facility Care in Three States (Washington, D.C.: AARP, 1996); Medicaid and Long- Term Care: Successful State Efforts to Expand Home Services While Limiting Costs (Washington, D.C.: U.S. GAO, 1994).
  4. MassHealth Financial Eligibility, 130 CMR 520.026.
  5. Among funding sources are programs of the Division of Medical Assistance, including GAFC, Home- and Community- Based Waiver Program, Program of All-Inclusive Care for the Elderly (PACE), and SSA Supplemental Security Income (SSI-G for assisted living) as well as programs of the Department of Transitional Assistance, such as EAEDC, which supplements rest home per diem costs).
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