My Turn: The price of inadequate Medicaid reimbursement

For the Monitor
Monday, December 18, 2017

For New Hampshire’s long-term care providers in 2017, there were signs in Concord that a caregiver staffing crisis fueled by low-Medicaid reimbursement was finally being recognized. In his budget address, Gov. Chris Sununu acknowledged “we have serious workforce issues in virtually every area of health care.” Senate President Chuck Morse led efforts to provide a modest infusion of additional funding for long-term care.

Medicaid rates for the 24/7 care, meals and housing provided by assisted-living facilities, seemingly forever locked at $49 a day, finally rose 4 percent. That progress must be built upon. Yet hard-won gains cannot be exaggerated. On Jan. 1, the average nursing home reimbursement rate goes up a nickel per patient, per day. That will hardly fix a staffing crisis so acute that at least one county-run nursing home has had inmates staffing its kitchen.

Medicaid reimbursement for nursing homes is reduced by the application of system-wide medians, and the disallowance of actual costs, to arrive at what is called a “full” payment rate. That “full” payment is then reduced by applying a budget mechanism, unique to New Hampshire, now referred to as a budget adjustment factor. That factor has, in the past, resulted in as much as a 32.2 percent reduction in the full payment. Effective Jan. 1, it will be a 28.76 percent reduction.

From July 1, 2009, through June 30, 2018, Medicaid rates will have risen only 7.6 percent. With wages most of Medicaid care costs, the effects upon caregiver recruitment, and retention, are obvious. The Consumer Price Index, for example, has already gone up 15 percent since July 1, 2009. Too many caregivers are taking on overtime or second jobs just to make ends meet. Many are single moms pursuing living wage dreams.

Facility budgets are badly strained by overtime costs, or by being forced to use staffing agencies or “traveling nurses.” Such temporary staffing accounts for 30 percent of the caregivers in one facility I know, which drives unreimbursed costs in excess of what the facility pays its own staff. Even fast food restaurants are offering higher wages than what Medicaid can support. As Gov. Sununu had poignantly noted in his budget address, “We pay people more money to wash dishes than we pay them to watch and care for our loved ones.” Two nonprofit nursing homes have closed in the past year.

The sweeping scale of the budget adjustment factor plays no favorites between county-run or private facilities, or between for-profit or nonprofit. Thus, the Merrimack County Nursing Home, which should receive a “full” Medicaid rate of $239.56 per patient, per day, instead will receive $170.66. Concord’s nonprofit Presidential Oaks will receive $152.57 per patient, per day, instead of $213.34. The proposed budget for the county facility forced to use jail inmate staffing is $2.3 million over the revenue it receives, because Medicaid doesn’t pay the bills. A fee, drawing federal funds, that facilities pay cannot fully close these payment gaps, nor can private-paying patients make them up without being forced onto Medicaid themselves – a vicious cycle.

Looking ahead, it’s heartening that the Department of Health and Human Services has acknowledged the pain inadequate Medicaid reimbursement creates, and is committed to working with nursing home care advocates, within the means provided the agency by the General Court, to improve matters. The necessity of taking the “long view,” rather than simply lurching from one state budget to another, is long overdue.

New Hampshire is aging, and already has the nation’s second-oldest median age. We want a robust system of choices to be available to our seniors, from home-and-community-based services to the skilled care that nursing homes have long provided. We must carry that hope, and vision, into the new year and beyond.

(Brendan Williams is the president/CEO of the New Hampshire Health Care Association.)