California providers to see $1 billion windfall

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California nursing homes are about to receive an extra $1 billion, largely thanks to the federal government.

Last month, the federal government approved landmark legislation to increase provider payments for low-income residents -- who account for two-thirds of California's nursing home population.

Freestanding facilities will see an average Medi-Cal (Medicaid) payment increase of about 10% which backdates to Aug. 1. They will also see an infusion of cash from an average cost of living increase of 5.7%, retroactive to Aug. 1, 2004. A provider tax will help fund the increase, in the form of higher matching funds.

The funding has been a long time coming for the homes that have struggled for better Medi-Cal funding for more than a decade. More than half (51%) of the state's facilities operate with no margin or at a loss, according to state providers.

But the bill has critics who allege the new funds will be used to pad operators' profits instead of attracting and retaining quality staff personnel.