Reimbursable cost reporting by nursing homes;

              Reimbursable Cost Reporting by Nursing Homes
by WILLIAM B. MANSFIELD Principal, Denver Office
Presented before the Annual Meeting of Colorado Nursing Homes, Inc., Boulder—November 1965
NURSING HOMES, through their associations, have for many years been negotiating with their state departments of public welfare about the rate-setting methods used to pay for services rendered. With a few exceptions, providers of care to publicly assisted recipients have been paid arbitrarily determined daily rates that apply to all equally without regard to actual costs; rates have also been paid that might vary according to the degree of care required by the patient—that is, skilled, technical, personal, or custodial. Sometimes the amount paid has been determined by the rating of the physical plant and apparent ability to provide the services required.
In many states the licensing function is a duty assigned to the department of public health and this department may impose standards concerning qualifications of personnel, fire, safety, and nutrition. The added costs of adopting new or more stringent standards may not be currently recognized by the departments providing public assistance in their payments to providers of care.
Nursing homes and their associations have generally resisted re­quests
for information concerning costs of providing care. Proprietary nursing homes dominate this field of health care, and reluctance to dis­close
financial information to anyone other than internal revenue is un­derstandable.
Grocery and hardware stores are not required to prove their costs or to justify their charges. Operating a nursing home for a legitimate profit does not adversely affect the quality of care provided. However, the big volume purchasers of nursing home care today are state governments. The distribution of state funds is made by a department financed by appropriations based on a budget that must be explained to the legislature, examined by its committees, and supported and approved by committee majorities.
Medical assistance to the aged in the State of Colorado is provided under a law that says
The State Board shall establish a price schedule for nursing home and other medical services related as nearly as possible to the cost of such services rendered to the recipient or the level of services utilized.
In addition, the prices established are to provide reasonable compensa­tion
for the services rendered and are to be subject to periodic adjust-
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