Abstract
lower cost alternative to extended hospital stays. Because Medicare policies impede beneficiaries' access to covered services, however, patients often cannot substitute nursing home for hospital care and the program forgoes intended savings. Medicare's benefits for nursing home care differ from all its other benefits. Limited by law to short-term postacute care, Medicare-covered services account for only a small portion of the care nursing homes provide. Hence Medicare depends on service for a nursing home industry oriented toward long-term non-Medicare patients. Medicare has never recognized its limited purchasing power. On the contrary, Medicare's payment, certification, and claims processing rules depart from predominant industry practices. Medicare's payment methods acknowledge neither the costs of the more intensive care its patients sometimes require nor the costs of satisfying its particular rules. Consequently, many nursing homes (about a third) that could participate in Medicare do not, and many participating nursing homes limit their Medicare service.
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