Collaboration and Quality: How Operators Fought for Higher Medicaid Rates — and Won

The state of Oklahoma has had the dubious distinction of ranking near the bottom in both Medicaid reimbursement for skilled nursing facilities and in the quality of care provided at those facilities. But legislation recently enacted by the Sooner State aims to change that, by bolstering reimbursement for SNFs — if they can make improvements on key quality metrics.

The Nursing Home Quality Assurance Initiative (NHQAI), which was implemented in the state budget recently approved by the Legislature and signed by Gov. Kevin Stitt, establishes a pay-for-performance component based on improving on four quality measures:

  • Pressure ulcers
  • Urinary tract infections
  • Antipsychotic utilization
  • Weight loss among nursing home residents

Care Providers Oklahoma president and CEO Nico Gomez was on the front lines of efforts to counter the Medicaid shortfall in Oklahoma for years prior to the passage of the NHQAI. Previous attempts to bolster SNF Medicaid reimbursement included a failed legislative attempt last year, and a plan to break into the Centers for Medicare & Medicaid Services’ (CMS) upper payment limit program, which was rejected earlier this year.

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On the newest episode of Rethink: The Future of Skilled Nursing, Gomez talked about how providers in Oklahoma were finally able to obtain a Medicaid increase, what how they built on lessons learned from previous attempts to address the Medicaid shortfall, and what providers in similar situations in other states can take away from the victory in the Sooner State.

Excerpts from the interview, condensed and edited for clarity, are below. You can access the full episode on SoundCloud, Apple Podcasts, and Google Play. And be sure to subscribe to “Rethink” on the podcast service of your choice, so you never miss an episode.

Can you talk about the Medicaid reimbursement landscape for SNFs in Oklahoma prior to the passage of the NHQAI?

Oklahoma has a familiar story. I had a chance to talk with a lot of colleagues across the country at various meetings, and we were all struggling with a declining Medicaid reimbursement rate at the state level.

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Oklahoma was certainly no different. And as that substantial Medicaid gap kept growing, we were starting to see homes close in our state. It was really difficult for our member facilities to really compete for employees, and when you have low unemployment and higher wage competition, this started to create an issue where we could no longer find savings within our current system.

So we actually had to have an increase in Medicaid funding in order to be able to survive and take care of the seniors who were relying on our care.

What are some of the forces that led to the Medicaid shortfall in Oklahoma? How big did that gap eventually get?

We didn’t get to this position overnight. There were a lot of issues, where you can’t really point your finger to and say, “Well, that’s to blame,” or “That’s to blame.” It was just a combination of a lot of very difficult events from an economic standpoint.

If you go back almost 20 years ago to 2000, 2001, the state of Oklahoma passed a provider fee. When that provider fee was passed, our daily rate at that time was $90.49. But our cost was just under that; it was around $89. That was the last time we were at or above costs, was really in state fiscal year 2001.

Each year after that, the gap kept getting bigger — a couple dollars here, a couple dollars there — and then when we got to that recession, back in 2007, 2008, we really started to see a lot of pressure on the state Medicaid agency — where they were going, “We do not have state funding, we don’t have federal funding.” So it really started to put pressure, where they actually had to cut rates in state fiscal year 2010 — they cut rates for all providers 3.25%.

But the gap over the last eight years continued to grow. And maybe some years, it was not a bad year where we had to cut rates. Maybe it was where the Medicaid agency said, “We have enough money to keep from cutting rates. Now we can’t increase rates, but we can keep from cutting rates.”

Well, that doesn’t really help providers, especially on the long-term care side, when we are so dependent on what Medicaid pays — but our costs did not go down or did not stay flat. Our costs continued to rise. And so that gap between cost and reimbursement continued to grow to where it was more than $20 again in state fiscal year ’17.

At the end of 2017, our association, Care Providers Oklahoma, got together at a board retreat and said, “Medicaid reimbursement has to be the number-one issue because if we don’t fix that, there may not be a future for us.” So we actually went into that 2018 session looking to change the methodology.

So we looked to our state to the east, Arkansas, and kind of looked at their model, because theirs was more of an acuity-based model, where ours is based on direct-care spend. We have a fairly unique methodology: about 70% spending on your direct care spend, plus a base rate.

And so we went into the 2018 session and really kind of pushed that. I think the idea was right, but the environment was wrong, and we didn’t have a coalition; we didn’t have support from other provider groups in the state. We didn’t have any support from the advocates. And we basically kept running into a lot of difficulty in trying to get that to move forward. We kept telling a story about the cost gap and what that was creating, and we had these homes closing. We closed six facilities since 2017, and those were both urban and rural.

And as we got to the end of that particular session in 2018, we did not get any change in methodology, we didn’t get any reforms.

So last summer, we sat down and said, “Okay, we still have the issue. We still have a long-term issue that if we don’t fix, the crisis is going to continue.” So we had an opportunity to sit down with LeadingAge and some of the advocates in this area and go: What kind of solution can we develop together that’s actually going to not just improve reimbursement, but move the needle on quality and help improve the quality of life for our residents?

It really started to build into the fall. We didn’t have a funding solution, but we had a policy solution on which we all agreed. There were some tweaks along the way, but for the most part, [with] this coalition of folks, it was: “If we do this together with no changes, then we can all support this.” But as soon as one thing changes, then the coalition falls apart and momentum falls apart.

So we had to start early, get on a plan together, and then execute that plan through the legislative session.

Can you talk about what you learned in your experience trying to break into the Upper Payment Limit program?

In 2018, it was a massive teacher walkout. There were a lot of issues. There was a lot of pressure on the state legislature to raise revenue. And historically, we saw a decline in our federal matching rate, because Oklahoma — as an oil and gas state, the federal matching rate is dependent on our state’s per capita income compared to other states. And our per capita income was strong, and our federal matching rate declined.

It continued to be that perfect storm of issues, where our federal funding was dropping, our state funding was dropping, and you had higher ed and common ed and transportation and corrections and everybody at the table with a hand out saying, “We have never recovered from the recession — help, help, help!” And our voice and the voice of our residents was kind of getting lost. Nursing home finances just aren’t in the forefront of public opinion.

Well, other states were looking an upper payment limit program, where they used these partnerships with local cities and communities with hospitals, and every state looks a little bit different. So we looked at [that] as a potential solution. We went through two rounds of state plan amendments with the Centers for Medicare & Medicaid Services, and we kind of got the denial in January.

So we said, “We’re going to put all our effort into working on this NHQAI,” and that’s kind of what we did. Even though we feel like we had an argument to qualify, but CMS didn’t see it that way.

What would you tell other providers in states with similar Medicaid gaps?

I think the first part is you have to understand and research and survey the environment that you’re in. Every state’s dealing with different issues. Although there may be some commonalities, there’s different politics and different things going on.

But we had to identify our crisis. So my suggestion that other states need to look at is: Understand the issues, but then identify the crisis, engage those constituents, whether they’re family or friends or neighbors or people who just want to help improve nursing home care in their state. Don’t look to blame. We didn’t point to this group or point to that person or that organization and say, “That’s why we’re here in this place!” We just looked for a way to solve the problem. And then once we solved the problem, we built the coalition around it.

My counsel to other states, if you boil it down to just a few, is: You have to really have a really good understanding of your environment; test messages that are going to bring people to action; build that coalition, don’t go on it alone; build your army of advocates; and then be relentless with the legislature — not to the point where you’re beating them up in any kind of verbal assault, and I say that because there’s a lot of vitriol on a lot of these issues, and there’s a lot of things that we can easily lose our temper on.

But this was an issue where we just kind of kept asking the legislature: “Here’s the crisis, here’s the solution, will you please support it?”

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