South Dakota Nursing Home Leaders See ‘Statewide Disaster’ Without Medicaid Increase

Nursing homes in the state of South Dakota are facing a $42 million annual shortfall in Medicaid reimbursement, which has led to the closure of several facilities. Without an increase, industry leaders said, the closings could lead to “statewide disaster.”

The Argus Leader first reported the story.

Nine nursing facilities have already closed, two are scheduled for closure, and more will come without an increase in Medicaid reimbursement rates, South Dakota Health Care Association director Mark Deak said, according to the Argus Leader.


The two facilities scheduled for closure were operated by Skyline Healthcare and its affiliates before the Wood Ridge, N.J.-based operator collapsed in Nebraska, Kansas, and Pennsylvania. It had not paid vendors and employees in multiple states at the time of its breakup.

When the Skyline homes in South Dakota were taken over, a spokesman for the operator blamed its landlord, Golden Living, for most of the problems. A different spokesperson for Skyline’s Kansas affiliate pointed to Medicaid reimbursement for the issues in that state.

In South Dakota, nursing homes have an average of 55% of residents on Medicaid, with 6,500 residents in such facilities. The state has the lowest Medicaid reimbursement in the U.S. at $146 per day per person, according to state Rep. Steven McCleerey, while the average daily cost for nursing home care is $181 per person per day.


A bill introduced by McCleerey would provide $8 million in state funding, with a $10 million federal match; the state House Health and Human Services committee unanimously passed a motion Tuesday to send the bill to the House Appropriations Committee for consideration, the Argus Leader reported.

In addition, South Dakota Gov. Kristi Noem proposed an increase in the state budget that would take the reimbursement rate up to almost 100% of the reimbursement gap, on top of a $5 million, one-time innovation grant for nursing homes. The state Bureau of Finance and Management opposed the bill in favor of the budget increase, which would total $10 million with matching federal funds, the Argus Leader reported.

Nursing home administrators told the House Health and Human Services Committee on Tuesday that nursing homes have to raise rates for non-Medicaid residents to cover the gap, and that the discrepancy prevents the facilities from paying employees competitive wages.

Medicaid shortfalls have been a recurring problem around the country, with nursing facilities in Massachusetts also recently reporting similar problems. The Bay State’s Medicaid reimbursements are based on 2007 costs, and a typical nursing facility provides $900,000 in uncompensated care annually, the Worcester Telegram & Gazette reported.

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