Two arguments, one for full Federal funding and one for a continuance of state - Federal funding of long term care, are made in this chapter. Both arguments have one important area of agreement; they both set forth cost containment as a primary objective of any funding scheme. Furthermore, both suggest that this can best be achieved through some form of prospective reimbursement. Under the present system of retrospective reimbursement Medicaid pays, without limit, for all eligible services provided. This, many believe, encourages the provision of unnecessary services which results in an unnatural escalation of costs. Prospective reimbursement simply means forecasting service needs for some future period (usually one year) and then determining how much will be paid for those services. This would establish a limit or "cap" on Medicaid expenditures which would presumably have the effect of containing run-away costs.
O'Connor, Kevin and Volpe, Fred J., "08. The Financing of Long Term Care" (1980). Public Administration Manuscripts. 8.