Two Illinois nursing home operators weren’t entitled to a public notice and hearing before their daily Medicaid rates were retroactively lowered by the state, a federal court ruled this week.

Heritage Operations Group LLC and Rock River Health Care LLC, which both operate long-term care facilities throughout Illinois, first sued the Illinois Department of Healthcare and Family Services in November 2017. After the original suit was dismissed without prejudice, the operators both filed similar complaints in September and October 2018. 

The nursing home operators alleged Illinois HFS violated federal Medicaid laws and their due process rights when it retroactively changed reimbursement rates for its facilities in 2017. They also claimed the Centers for Medicare & Medicaid Services acted unlawfully by approving the plan under which HFS changed the reimbursement rates. 

Operators argued the state must give justifications for proposed rate changes.

Under the Illinois plan, the daily reimbursement rates for nursing facilities are calculated based on support, nursing and capital costs, according to court documents. The nursing costs include wages and benefits for licensed staff and nurses, direct-care consultants and healthcare supplies used by or for a resident. 

Judge John Robert Blakey wrote the nursing home operators don’t possess a protected property interest, which would merit due process, in its daily Medicaid reimbursement rates. The Illinois state plan allows HFS to tweak reimbursements, he wrote.

HFS “retroactively changed a reimbursement rate contingent upon quarterly patient data that was subject to MDS (minimum data set) audits and resulting adjustments per the terms of the Illinois state plan, and thus did not trigger a legitimate claim of entitlement,”  Blakey wrote.