Just when you think Medicaid payments couldn't get worse ...

John O'Connor
John O'Connor

Providers have long-enjoyed a like-hate relationship with Medicaid.

On the one hand, the program historically has paid for most long-term care services. On the other, the rates often tended to be ridiculously inadequate. And many states have not been exactly prompt with payments.

Small wonder many operators view the program much as a circus trainer might eye a recently acquired wild animal: There's lots of potential, but danger too.

Speaking of potential harm, providers would do well to keep an eye on recent developments in Puerto Rico. For depending on how things shake out there, Medicaid as you've come to know and tolerate it might just become a thing of the past.

As you may know, Puerto Rico now finds itself in a deep financial crisis. How bad is it? Well, let's just say Illinois looks fiscally responsible by comparison. Yeah, it's that bad.

For after many years of spending far more than it could ever hope to pay back, Puerto Rico is now officially insolvent. To help dig out, the island's lawmakers turned to Congress for help. Federal lawmakers responded by passing a law that restructures Puerto Rico's $73 billion debt obligation (which doesn't account for another $40 billion in pension IOUs). But creditors have successfully sued in federal court to repeal the law. The Supreme Court has agreed to hear Puerto Rico's appeal. But what's even more interesting is that Democratic senators have introduced a measure that would give the island Chapter 9 protection.

In other words, the bill would let Puerto Rico file for bankruptcy. Should that happen, it seems reasonable to ask whether some fiscally troubled states might be next in line.

As things now stand, states cannot seek bankruptcy protection. But some strong voices in Congress are beginning to argue that such an option makes sense. It would certainly be preferable to states gutting services or a taxpayer bailout, or so the thinking goes.

And if that change should happen, guess what that would mean for Medicaid obligations states have to operators? Does the phrase “pennies on the dollar” ring a bell?

For what it's worth, conventional wisdom holds that such an occurrence is highly unlikely. Almost as unlikely as a New York billionaire and a Vermont Socialist facing off for the presidency.

Just couldn't happen, right?

John O'Connor is McKnight's Editorial Director.

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Daily Editors' Notes

McKnight's Daily Editors' Notes features commentary on the latest in long-term care news and issues. Entries are written by Editorial Director John O'Connor, Editor James M. Berklan, Senior Editor Elizabeth Newman and Staff Writer Emily Mongan.

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