Bill to Boost Medicaid Rates for Texas Nursing Homes Dies Before a Vote

The Texas Legislature failed to pass two bills that would have provided Medicaid reimbursement relief for skilled nursing providers before the end of its most recent session.

That could spell trouble for providers in the Lone Star State, which already has a notably low Medicaid reimbursement rate, according to Kevin Warren, president and CEO of the Texas Health Care Association (THCA).

THCA is the local branch of the national nursing home trade group American Health Care Association (AHCA).

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The average difference between the cost of providing care to a Medicaid resident and the reimbursement is $27 per patient per day, Warren told Skilled Nursing News. Though the program wouldn’t have made up the shortfall entirely, it would have given providers a maximum of an additional $18 per resident per day, THCA director of government relations Scot Kibbe told SNN in March.

With a $945 million shortfall for all nursing homes in Texas, the failure to pass the bills means that SNFs will have to find new ways to cope — and quickly, Warren said. Providers in the state of all sizes, along with consultants, had been working on this bill since the summer of 2017, he told SNN. While it’s still not clear what will come next, he emphasized that providers cannot wait until the next legislative session, which won’t convene for two years.

“Every provider that relies on Medicaid, that has a significant footprint of Medicaid in their facility, is going to be taking a good, hard look at what changes they need to make, if any, in terms of going forward,” Warren told SNN.

The failed legislation, Senate Bill 1050 and House Bill 3342, would have set up a long-term care quality provider participation program (QPPP) that provided additional compensation to SNFs that met certain quality metrics.

The program would also have bolstered overall Medicaid funding by establishing a pool of incentive funds that all operators in the state would have paid into. Those dollars would have been distributed from a trust fund held by the Texas comptroller, along with any corresponding federal funds.

Half the funds would have gone to Medicaid-eligible SNFs with a history of expenditures for capital improvements, renovations, or other improvements related to direct care services. The other 50% would have been earmarked for facilities based on their improvement and investments in direct care services.

SB 1050 had a hearing in the Texas Senate Finance Committee, but never came up for a vote, while HB 3342 never even received a hearing, Warren told SNN. Part of the challenge was that the Nursing Home Quality Act, as Warren referred to the bills, had the appearance of being a new tax, a characterization the THCA disagreed with.

“We’re going to be spending the summer visiting with providers, and we know that there were providers counting on this bill to pass, in terms of helping them, and providing a pathway forward,” Warren told SNN.

Omega Healthcare Investors, Inc. (NYSE: OHI), a real estate investment trust based in Hunt Valley, Md., specifically indicated in its fourth-quarter 2018 earnings call that it was granting one of its SNF operators rent deferrals to allow them time to potentially benefit from the program, even though executives acknowledged the outcome wasn’t clear for the bills.

Given that uncertainty, it wasn’t clear whether Omega would have to make more amendments to its settlement and forbearance agreement with the operator, Daybreak Venture, executives said on the first quarter earnings call for 2019.

Matthew Gourmand, senior vice president of investor relations at Omega, declined to comment on Daybreak specifically when reached by SNN. But he echoed Warren’s frustration with the legislature’s failure to pass the bills.

“Given the challenges facing numerous operators in the state, it is extremely disappointing that the Texas legislature has once again failed to address their woefully low Medicaid rate,” he said in a statement provided to SNN. “Despite this, all of our Texas operators continue to work diligently to provide quality care to their residents.”

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