States' belt tightening worsens Medicaid shortfalls to nursing homes

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Nursing homes have been a casualty of this recession. That is clear from the newly released study about Medicaid rates from accounting firm Eljay LLC.

Medicaid rates not only are projected to shortchange nursing homes by $4.7 billion this year, or $14.17 per Medicaid patient per day, but rates are likely to sink further in 2010 and 2011 according to the study, which the American Health Care Association commissioned. A major reason for that is that states are slashing budget programs to fill deficit holes. Also, funding from the American Recovery and Reinvestment Act of 2009, also known as the federal stimulus package, enacted this year will end at the end of 2010.

One of the saddest realities of this year, as this study notes, is that states did not use money that they received from the stimulus package the way they were supposed to. The package offered states a temporary higher federal match on provider tax funds. But instead of using savings from the higher federal match to increase nursing home reimbursements or lower the provider tax rate, states used it to subsidize state budget deficits.

That is a shame.

Nursing homes desperately need Medicaid funding. They have been underpaid for years and have been relying on Medicare to compensate for their shortfalls.

Now the situation appears even worse after the Centers for Medicare & Medicaid Services reduced Medicare payments in the fall. Also, it seems all but certain that a healthcare bill will contain some Medicare cuts. What do you do when the subsidy for the main funding source shrinks?

States' empty coffers inflict a new kind of stress on providers. States are placing more Medicaid money into non-institutional services. As a result, there is more competition for funding from long-term care programs, the study says. This, along with the weakened economy and the loss of stimulus revenues, bodes badly for Medicaid funding increases in the next couple of years.

Robert Van Dyk, chairman of AHCA, sums up the situation well: "The substantial gap between the cost of providing quality care to seniors and what Medicaid actually pays—combined with the enormous pressure on state budgets caused by the ongoing recession—represents a clear and present danger to America's most vulnerable frail, elderly and disabled citizens."

This is an unfortunate situation—one that our law and policy makers badly need to address.


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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 Marty Stempniak.