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Senior Living

2010-02-01 08:42:00

What will happen with Medicaid cuts?

Question: You’re a nursing home administrator. What do you think is going to happen with the State of Kansas cutting Medicaid payments by 10%?

Answer: I think we’re all going to suffer because of it. However, there is a solution. Hopefully, the Legislature will act fast to ameliorate the situation. The reason given for the cut was that the state general fund was depleted due to decreased tax collections because of the bad economy. By cutting Medicaid reimbursement by 10% they would save millions of dollars in payments to nursing homes. On the surface, it looks like a reasonable and necessary action. However, the long term and short term ramifications of this action, do not bode well for our state, our local economies, job availability or the care of our seniors. At the same time state officials were considering this 10 % cut to the Medicaid program, some state employees were being given 10% raises. In nursing homes I haven’t seen a raise for anyone above 2% annually in the last seven years. In some instances, I have seen companies actually CUTTING pay rates by 2%, just so they could keep the home open and the residents cared for. The 2009 Legislature froze Medicaid rates at the then current level, for 2010. Now they want to cut back the payments for the frozen rates by 10%. When the state perennially pays $14.00 per day less than the costs of care for Medicaid residents, homes which are willing to take care of these frail elderly persons, are in a constant state of scrambling for ways to cut costs and survive. Approximately 70% of operating costs of a nursing home are labor-related. It’s an easily understood statistic when you realize they have to keep nursing staff working 24 hours per day to provide the needed care. In reality, the first casualty when there is a high percentage of Medicaid residents in a home and not enough money to continue, is staff-to-resident ratios. Once staff (i.e. labor costs) are cut then one has to overwork the staff you do have, to keep the bankruptcy wolf from the door. When jobs are cut, not only care, but the local economy suffers. When small homes, in areas which have high percentages of Medicaid residents, have to sustain a 10% cut in reimbursement, we will see closures. Those closures come with resulting job losses and the local economies take a major hit. In many small communities, the nursing home is the largest employer and purchaser of items and services. A closure would be devastating. Many small rural communities in Kansas are already struggling to survive. Closing their largest employer/purchaser could sound their death knell. That would result in widespread unemployment, and greater losses to the state through unemployment payments Typically, every dollar paid out in salaries in a local economy is spent, (and taxed), seven times before leaving the area. If those taxes are not collected, it will result in an even greater shortfall in the state tax coffers. I hate to be talking only about dollars, because the effects of home closures would be devastating to the residents and their families socially and psychologically also. Many residents would have to be moved to other homes, far from families and friends. In some cases they would be unable to find a home at all, leaving them with families who are unable and/or ill-equipped to care for them. In other cases, nursing homes would be unable to admit new residents on Medicaid, because they couldn’t sustain the additional losses. There is a Bright Spot on the Horizon. Currently, the Kansas Health Care Association, and many providers are encouraging the legislature to pass a “bed tax” or “provider tax/assessment” It’s not often that we see a group asking to have a new tax imposed on them. The reason they are asking to be taxed is simple. Under the federal guidelines for Medicaid the state furnishes 30% of the cost of Medicaid, and the Federal Government pays 70%. The way it actually works, is Kansas pays the federal government, the 30 % of the costs of Medicaid in Kansas. The feds then add the 70% they pay ( all out of our tax dollars I might add) and then returns the whole 100% to Kansas. ( At this point we won’t get into the size of the bureaucracy needed to accomplish this.) If Kansas passed a provider tax and then sent that money to the feds, they would receive back about $3.34 for every $1.00 sent to the feds in provider taxes. The Kansas Health Care Association says that 91% of Kansas nursing homes would benefit from such a tax. That 91% are those who are taking the biggest hit from the reduced payments, because they have the most Medicaid residents. This tax, with the increased return, could save our nursing homes, our local economies and our jobs and ensure that our elderly are cared for. BUT! It needs to be done quickly. That means the legislature needs to act on this as soon as possible after their opening date so the assessment plan and state plan amendment proposal can be submitted by March 1, 2010. If submitted by that date then it could become effective by July 1, 2010, hopefully in time to save those homes which would have closed, and the jobs which would have been lost Actually, it is possible that some homes will not be able to weather the 6 months of reduced payments and will have to close their doors. This will throw their communities into chaos as families seek a new place of residence, out of the area, for their frail elderly, and as the jobless seek new employment, again probably out of the area. This tax plan was presented to the Kansas Health Policy Authority Board at their Nov. 17, 2009 meeting but they deferred action until 2010. We now have no time to lose. If interested persons will contact their legislators and tell them they want this provider assessment approved, it stands a much better chance of passing in the required time frame. It is essential for our communities and our honored elderly, the ones who provided for us as we were growing up, that state legislators step up to the plate quickly to correct this dire situation. As our representatives they are expected to follow our wishes. They can only do that if we make our wishes known to them, in a timely manner, so they can act accordingly. A simple e-mail to your legislator is very powerful If you don’t know who your legislator is, or want assistance in contacting them, please call me and I will help you in anyway I can.