NYTimes: Managed Care’s ‘Perverse Incentives’ Victimize Home Care Patients

Long-time managed Medicaid patients are seeing their home care hours slashed abruptly and illegally, even as their condition worsens, according to an article recently published in The New York Times.

Specifically, Medicaid beneficiaries in New York state are experiencing reductions in the number of hours of home care they receive out of the blue—despite the fact that only a change in an individual’s medical condition or circumstance is supposed to legally permit a reduction.

When managed long-term care switched from a fee-for-service payment model to a flat rate payment for each patient enrolled, a “perverse incentive” resulted for managed care insurance companies, the article said. Simply, these companies have a financial incentive to provide less care to each patient, according to a federal class-action lawsuit filed on behalf of aged and disabled clients threatened with cuts in home care.


“The less care they provide to each individual, the more they earn,” stated the lawsuit, filed against managed care insurance company Senior Health Partners of Healthfirst and the New York State Health Department.

Moreover, since January 2015, Senior Health Partners of Healthfirst and at least two other managed care companies in New York have been systematically slashing the hours of home care for their disabled clients, usually without sufficient legal justification or notice. That’s according to a new study co-sponsored by Medicaid beneficiary advocate Medicaid Matters and the New York Chapter of the National Academy of Elder Law Attorneys.

From June 2015 to December 2015, the number of hearings challenging home-care cuts increased sixfold, the study revealed. The companies lost or just withdrew proposed reductions when challenged in more than 90% of those 1,042 hearings.


Additionally, not counting settlements, managed care companies won just 1.2% of the time, the study found. Still, many of the most vulnerable clients had no way to challenge cuts, as they did not know they could appeal, The New York Times reported.

Written by Mary Kate Nelson

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