Court rules against nursing homes in Medicaid rate-setting case

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A New York State Court of Appeals has ruled that the state's nursing home rate-setting methodology for Medicaid program expenses is "reasonable and adequate."

In making its decision, the court rejected the argument of 62 nursing homes, which argued that the rates were unconstitutional and a violation of law because they fell short of covering actual costs. The facilities said their Medicaid reimbursement rates covered only about 76% of actual costs. The rates are based on 1983 costs and adjusted for inflation and other factors.

The facilities said rate setting was also unconstitutional because the state required them to provide care but use their own assets for funding due to the insufficient reimbursements. But the court ruled that facilities voluntarily participate in the regulated program.