First-of-Its-Kind LTC Benefit Could Provide Medicaid Relief for Skilled Nursing Operators

A new long-term care benefit for residents of Washington state could ease some of the crippling Medicaid burdens on nursing home operators in the state.

Starting in 2025, qualifying Washingtonians will have access to a $36,500 lifetime long-term care benefit, funded by a new 0.58% income tax set to take effect in 2022.

The program, signed into law by Washington Gov. Jay Inslee on Monday, is the first of its kind to cover a full range of benefits from nursing home care to home health services to reimbursements for previously unpaid family caregivers, according to the New York Times.

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“An alternative funding mechanism for long-term care access in Washington state could relieve hardship on families and lessen the burden of Medicaid on the state budget,” lawmakers wrote in the bill, which passed both houses of the legislature in April. “In addition, an alternative funding mechanism could result in positive economic impact to our state through increased state competition and fewer Washingtonians leaving the workforce to provide unpaid care.”

Inslee, a Democrat who’s among the glut of early candidates seeking the party’s 2020 presidential nomination, touted the LTC trust fund along with a separate bill that creates a so-called “public option” health plan open to all state residents.

“Washington state, once again, is at the head of the pack when it comes to policies that help working families and provide much-needed security when it comes to their health care,” Inslee said in a statement.

Long-term services and supports currently account for 6% of the state’s operating budget, according to lawmakers — a figure that they predict will double by 2030, requiring an additional $6 billion in funding.

The text of the bill itself illustrates that a $35,600 lifetime benefit wouldn’t go a long way toward covering institutional nursing home costs, with lawmakers noting that the average Medicaid resident racks up an annual bill of $65,000.

“These are costs that most seniors cannot afford,” they noted.

But skilled nursing operators were optimistic that the move marks a step in the right direction in a state that has seen its fair share of Medicaid woes.

“The benefit will help families in crisis and would cover about four months of skilled nursing facility care in Washington,” Lauri St. Ours, director of government and legislative relations at the Washington Health Care Association, told SNN. “More importantly, by bending the curve on Medicaid spending, we believe the state can more effectively target Medicaid dollars to those patients with the greatest need for care and services.”

Last fall, leaders at the WHCA and its non-profit counterpart, LeadingAge Washington, sounded the alarm about insufficient Medicaid rates in the state, with providers losing on average anywhere from $35 to $47 per day on each Medicaid resident.

“Almost every building in the state of Washington is upside down,” WHCA president and CEO Robin Dale told SNN at the time, calling the situation a crisis. “The cost of care exceeds the Medicaid rate.”

With the new LTC benefit, Washington joins a string of states that have turned to novel methods in order to stem the tide of Medicaid pressures at nursing homes, which have claimed waves of closed SNFs across the country.

In Texas, the Quality Incentive Payment Program (QIPP) distributes Medicaid bonuses to properties that demonstrate solid care improvements, while operators in Indiana have benefited from a loophole in reimbursement regulations by transferring the ownership of their buildings to local hospital chains in order to secure higher rates.

Still, even leaders who have championed the Washington bill emphasize that it’s not a cure-all. Deb Murphy, CEO of LeadingAge Washington, described the law as “landmark legislation” and “the right public policy to encourage personal savings and responsibility for long-term care” in e-mailed comments to SNN — though she also stressed that it won’t replace Medicaid’s position in the overall LTC landscape.

“Because the benefit amount is limited, and depending on each individual’s medical complexity and duration of illness, the trust benefit could quickly evaporate for some,” Murphy said. “Importantly, Medicaid will continue to serve as the health care safety net for those who outlive their resources, including the trust benefit and other personal savings.”

Steve LaForte, director of strategic corporate operations and general counsel at Cascadia Healthcare, echoed that sentiment. Cascadia operates facilities across the Pacific Northwest and Upper Midwest, with a building in Battle Ground, Wash., and LaForte characterized the move as a way to help “create some more financial security for operators.”

“While not a solution, it’s a positive step towards future funding,” LaForte said. “However, on a current basis, we remain concerned that the state’s final budget for 2019-2021 failed to adequately fund Medicaid for long-term care, and this failure will continue to drive skilled nursing facility closures and create access to care issues.”

But by shifting certain expenses away from Medicaid and onto consumers via the benefit, operators could see reimbursement improvements over time. Once Washington residents begin accessing and using their long-term care funds in 2025, the state government projects Medicaid savings of $34 million — which St. Ours said could play a role in nursing home advocacy moving forward.

“If the legislature fails to close the current, significant gap in Medicaid funding between now and 2025, we would certainly make the argument that those savings should be used to address an untenable problem,” St. Ours said.

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