Financing and Payment Issues in Rural Long-Term Care Integration

Abstract

A major concern with fee-for-service reimbursement is that it forces consumers into predefined categories of service, whether or not those services meet their needs. The urban response to these incentives has been to experiment with capitated Medicare and Medicaid payments that integrate acute and long-term care funding. Although the use of capitation payments has conceptual and intuitive appeal, this article analyzes whether it is feasible in rural areas. Integrated financing systems for rural areas must meet the specific goals of people served in the areas and be compatible with local market conditions. Full risk capitation may be most applicable to urban settings where managed-care infrastructures are better developed and where risk can be spread over large numbers of consumers. Alternatives to fully capitated financing are emerging and represent more viable approaches for rural communities.