The Legislature faces two issues in funding Medicaid nursing home care:

• apportioning the state and counties' share ($53.3 million) of next year's projected cost increase and
• replacing the current cumbersome and costly billing process with a feasible alternative.

We identified three options along with their advantages and disadvantages for county funding of Medicaid nursing home care:

• setting the county contribution at 1.5%, which would require more state general revenue;
• equally splitting the projected cost increase between state and counties, which would require less additional state general revenue but would impose an increase of almost 80% on counties; and
• fixing the county contribution rate at 10%, which would raise $227 million for Fiscal Year 2003-04. This could create fiscal problems for some counties, but would reduce the need for state general revenue by $140.9 million.

There are three alternatives to the current billing process that would reduce disputes and save costs associated with resolving disputes about residency but require more work to develop.