Older Disabled Americans’ Care Preferences are 25% More Costly to Medicare

Less than 40% of older Americans with moderate to severe disabilities reside in a nursing home, with most choosing to receive care in their homes or communities, says new data analyzed by Avalere Health LLC for The SCAN Foundation.

In 2006, only 38% of older Americans with disabilities chose to receive care in nursing homes, while a majority 58% chose either staying at home or alternatives such as assisted living facilities, domiciliary care facilities, or continuing care retirement communities.

In general, Medicare spent 25% more money per capita on those receiving community care, at $18,308, compared to $14,594 per capita for nursing home residents. The program spent $14,001 for residential care residents.


This trend toward community-based care is significant when it comes to how acute and long-term services and supports are coordinated and managed, as well as the high costs of the care this population requires, says Avalere.

Because of this shift in preferences, long term services and supports (LTSS) spending to the community has been rebalanced in many states to more accurately reflect where older disabled Americans are being cared for.



By law, states must operate programs in a way that does not unnecessarily force an individual to move into a nursing home or other institution, supported by the Supreme Court ruling in Olmstead vs. L.C. that “the unnecessary institutionalization of people with disabilities is a type of discrimination prohibited by the Americans with Disabilities Act,” says The SCAN Foundation.

In light of this, the Affordable Care Act recently included opportunities for states to receive additional funding to help individuals transition from nursing homes to community based settings.

However, Avalere data shows that community living for those with disabilities has some negative aspects.

Older Americans who receive care in a community setting are hospitalized more often than those in nursing homes, as 21% of community residents with moderate or severe disabilities had two or more hospital stays, compared to 12% of nursing home residents, data shows. This suggests, says Avalere, that those getting community care don’t have access to the same levels of care management as those in nursing homes, which may ultimately result in higher care costs to the community.

“Our analysis shows the urgency of care coordination for disabled Medicare populations—particularly those who are living at home. The fact that hospitalization rates are double for those outside institutions is important as policymakers grapple with cost control at the federal level,” said Dan Mendelson, CEO and founder of Avalere Health LLC, in a statement.

View The SCAN Foundation’s data brief here.

Written by Alyssa Gerace