Two economists analyzed the Medicaid spending in nursing homes and determined that the amount of time a resident stayed in a skilled nursing facility did not correlate with the outcome of the patient. So regardless if the patient stayed a month or a year, the outcome did not differ greatly.

Their findings found a lack of evidence to prove that a longer stay would lead to improving health. Based on this outcome, they believe that the government shouldn’t pay for as many days for patients to reside in these facilities. They calculated Medicaid overspends 18.6% per patient on their stay. This leads to an annual over-expenditure of up to $10.2 billion.

The data analyzed nearly a million nursing home stays in four states from 2000 to 2005. The duo did acknowledge that this data could be outdated since it’s over a decade after their initial data retrieval, but they also said that “many of the new models encourage patients to choose home- and community-based services, and don’t necessarily focus on changing provider incentives and motives.”

To help solve this issue, they suggest the government withholds 1% of the daily Medicaid reimbursement rate and replace it with a single upfront payment to providers.  Because nursing homes tend to keep residents for longer periods of time during low occupancy, their solution would leave less of an incentive to keep Medicaid patients.