Kentucky nursing home providers breathed a collective sigh of relief in June, when Gov. Andy Beshear (D) approved $99.6 million to boost daily rates until Medicaid rebasing kicks in next year.
The state’s Department of Medicaid Services designated the funds, meant to help nursing homes cope with inflationary pressures, as a “forecast error” to provide the funds quickly. The result is an overall adjustment of about 8%, though exact bumps will vary by facility.
“The initial response from our membership has been positive,” Betsy Johnson, president of the Kentucky Association of Health Care Facilities, told McKnight’s Long-Term Care News. “Our members need dollars in the door right now to deal with increased costs.”
Across the US this spring, nursing homes have secured sometimes historic Medicaid increases. It’s a trend Johnson hopes her members will be able to take advantage of.
Kentucky’s Medicaid rate has not been rebased since 2008. The association and providers have actively lobbied lawmakers and the executive branch for rebasing and funding increases in a desperate attempt to prevent closures.
But as negotiations continue, especially in states whose legislatures develop two-year budgets, worries are already arising about how willing state lawmakers will be to sustain increases. Some fear a one-and-done approach, or pay structures that give a big boost that will still leave facilities with daily losses — only to be followed with minimal percentage increases next session.
That was the case in Pennsylvania, where providers won a significant 17% increase in 2022 after a 10-year dry spell. They faced the possibility of a flat line budget this year until state associations were eventually able to secure a small increase for nursing homes.
In Colorado, where nursing home spending was cut by 2% during the pandemic, a 2024 budget proposal offered a 10% increase, followed by 3% in 2025 and 1.5% in 2026.
Sustaining gains is a major concern for the Evangelical Lutheran Good Samaritan Society, which is downsizing from 22 states to seven, core Midwest states. Some of those that will remain in its footprint have traditionally lagged behind the rest of the US in nursing home funding.
“We’re hopeful that some of the states and their Medicaid reimbursements are starting to come along,” President and CEO Nate Schema told McKnight’s in June. “In South Dakota for example, we received a 25.3% increase. That’s unprecedented for us. It’s incredible and that’s going to start July 1.”
Two steps forward, one back?
But providers who have learned to write letters and show up for advocacy events can’t take their foot off the gas pedal now, Schema and others have underscored in recent interviews.
In Nebraska, for instance, where Good Sam has closed several nursing homes since 2020 citing reimbursement and staffing challenges, lawmakers bumped the rate by close to 20% last year. Schema said that was followed by a scheduled 3% this year, and a planned 0% increase for the next biennium.
“It’s important that policymakers know that once you do a deal like that, we’re not done. It’s not fixed,” he said. “That takes us from being one of the nation’s lowest paying states to bottom 10. We still have a long way to go. We need to continue to reinvest in our seniors if we’re going to keep access close to home.”
Such fall-offs in Medicaid increases remain a topic of major concern even as providers land historic increases, including the first permanent rate hike (worth $900 million) in Texas in a decade.
Needs remain unmet
Those who operate nursing homes, however, are continuing to keep track of the ways inflation and wage demands, in particular, are still eating into their revenues. Sharing those details will be key in keeping lawmakers focused on facilities’ and patients’ needs.
“Continual investment in our Medicaid provider nursing homes is critical to ensuring that facilities can sustain and reward their staffs and that the resources will always be present to care for the most vulnerable among us,” Rick Abrams, president and CEO of the Wisconsin Health Care Association, told McKnight’s.
“Our nursing homes will always be a critically important long-term care option for our seniors and for people living with disabilities.”
In Wisconsin, Abrams is “encouraged” that historic Medicaid increases in the 2021-23 budget will be maintained because they were added to the state’s rate-setting methodology.
The uptick brought the state’s direct nursing care component of the rate to a “very respectable” level of 125% of median cost; Abrams hopes to secure a similar increase for the state’s support services component for the next two-year budget, which will kick in July 1. That could mean a much-needed Medicaid funding infusion of $55 to $70 per patient day.
Back in Kentucky, the governor committed to reexamining cost reports to rebase rates effective July 1. A series of inflation-only fixes since 2008 has left providers with increases as small as 0.1%
The current, average daily Medicaid rate for providers is $221.20, which includes a $29 per day add-on that has been in place since Jan. 1, 2020. Rural providers can expect an increase of approximately 8% while urban facilities will get an additional 7.9% due to the emergency bridge funding.
Johnson said providers asked for an increase that would have amounted to approximately $28.80 per patient per day.
Still touch-and-go for many
David McKenzie, the owner of The Jordan Center, a 110-bed facility in Lawrence County, one of the poorest counties in Kentucky, sent a letter to Eric Friedlander, secretary for the Cabinet for Health and Family Services, saying the facility “will not make it” unless it sees a Medicaid increase by July 1. Fully 90% of the facility’s revenue comes from Medicaid, McKenzie wrote.
“We did everything the government asked of us,” McKenzie’s letter said. “We spent the money as we were asked, we were good stewards of the funds. … We have no one else to turn to for help.”
McKenzie, who sits on the KAHCare board, said he was forced to close a wing during the pandemic due to staffing shortages, which also resulted in denying admissions. The facility regularly operated at 97% capacity prior to COVID-19.
“I recalculate and recalculate my break-even every month,” McKenzie said. “Although [the bridge funding] is not enough to put me in the black, it’s certainly better than nothing. I’m grateful. And the [funding] — it’s close, which means hopefully that I can hang on a little longer.”
The Jordan Center has operated in Louisa, KY, as a family-owned business since 1974. In his letter, McKenzie indicated the facility did not have to lay off any employees during the pandemic, despite being in a “valley of death” as the one-two punches of COVID-19, inflation, and staffing problems continue pummeling the facility. He said on Friday that a single catastrophic event such as a broken sprinkler system or roof repairs could doom the nursing home.
“I don’t know,” he said, when asked if the bridge funding would be enough to keep the facility afloat. “It’s touch-and-go. I’m in a high-risk situation and holding on by my fingertips. It’s a scary place to be.”
From the July/August 2023 Issue of McKnight's Long-Term Care News
