Well, look who's back

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John O'Connor
John O'Connor

It wasn't too long ago that thousands of nursing homes were fleeing the Medicaid program.

Not that it was hard to see why. Medicaid rates were never enough to cover the price of delivering three squares, a cot and services each day. For decades, facilities had to count on the kindness of more generous Medicare payments to get over the hump.

Then around the turn of the century, some savvy operators realized that Medicare could be more than a supplement; that it could, in fact, become their main payment source. The trade-off was that facilities had to focus on post-acute services, especially rehab care. Thus, a quiet revolution took root. Some operators quickly saw revenues triple, or more. But alas, while that party may not be over, it is probably going to be a lot less fun going forward.

One reason is that Medicare invoices are getting a much closer look these days. Not to insinuate anything, but a lot of the bills that were approved in the past are no longer so fortunate. Expect that trend to intensify as the proverbial funding cupboard gets bare. And it's not like the Medicare managed care companies are interested in lowering their profits so skilled care operators can eat better.

Not that the envelopes being sent to your accounts payable department care about such matters. So operators need to find the money to compensate someplace else. And funny enough, we're actually seeing Medicaid days increase.

Is Medicaid's renaissance due to Medicare changes? In part, yes.

But Medicaid per diems are also getting better. In fact, the national average is now over $200 a day, for the first time ever. That's hardly going to cause flop sweat among the top Reimbursement Utilization Group categories, but it's a dramatic upgrade from days not long ago.

So will we continue to see more operators giving Medicaid a second chance? It's a fair question. My guess is that the answer will vary by state. That Obamacare's repeal-and-replace effort has been shelved (at least for now) may help in this regard.

Here's my advice to facility operators: Don't throw out old ties or state Medicaid manuals. You never know when either might come back in style.