$240M Illinois Medicaid Funding Increase Remains Unclear: ‘It Could Be Eaten Up in Penalties’

Illinois lawmakers’ approval of a Medicaid reimbursement increase for skilled nursing facilities earlier this year came as welcome news to providers in a state notorious for its difficult operating environment. But key definitions related to the requirements for staffing are still being finalized, and the ramifications for the funding boost are still unclear.

“The whole idea is to make sure there’s a Medicaid payment tied to mandatory staffing,” Matt Werner, a consultant who works with several different provider groups in the Land of Lincoln on Medicaid and other issues, told SNN.

As part of Illinois’s most recent budget, signed into law in June by Democratic Gov. J.B. Pritzker, nursing operators are slated to get relief to the tune of $240 million in the next fiscal year. The state submitted a state plan amendment to the Centers for Medicare & Medicaid Services (CMS) on August 23, and the government has 90 days to approve it, Werner noted.

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The funding boost came with fines for operators that do not meet staffing mandates, and it’s those staffing increases that represent the next hurdle for providers. Specifically, it’s the breakdown between basic and skilled care that represents the next front for SNFs in Illinois, according to Werner.

The $240 million can be broken down into “two main buckets,” Illinois Health Care Association executive director Matt Hartman explained. The portion of funding most closely associated with staffing was $70 million — based on a direct add-on of $4.55 per patient per day to a given facility’s nursing rate. To receive it, the SNF must meet the staffing needs of the residents, he explained.

“With that, you have to have a plan of staffing you submit to the [Illinois] Department of Healthcare and Family Services (DHFS),” Hartman said. “If you fail to meet the particulars of the plan, the $4.55 will be stopped.”

Illinois nursing facilities must set up a baseline comparison of actual staffing to the required staffing levels using data from the quarter ending June 30 of this year, according to a document from DHFS dated September 26. Operators must include targeted quarterly incremental increases for staffing, toward their required minimum staffing levels, and submit quarterly reports on their progress.

“Compliance on a quarterly basis will be determined based upon whether the actual staffing level for the quarter meets or exceeds the facility’s goal for the quarter,” the document reads.

The actual staffing levels will draw from payroll-based journal (PBJ) data each quarter, and if facilities don’t do what they said they would in terms of staffing for a quarter, they’ll lose the nursing rate.

That said, if facilities meet their staffing goal at the end of the year, they will receive the rate back. The DHFS has also said there will be no recoupment, Hartman note — meaning that if facilities don’t meet their staffing plans, they will stop receiving the increased rate but won’t have payments already made taken back.

But some specific details still need to be defined. Statutory language requires that nursing facility census data be self-reported, submitted quarterly, and “broken down by intermediate and skilled care,” according to the DHFS document.

Those terms still need to be defined, Hartman said, since the $4.55 add-on is predicated on the definition of a resident needing skilled care or intermediate care. The document from DHFS notes that intermediate care and skilled care do have specific meanings — but they have to be “further refined in metrics that can be identified and measured objectively.”

They’re also important because the definitions will drive how SNFs are penalized by the Department of Health if they don’t staff properly – as opposed to simply not meeting their staffing plans.

“Depending on how the money flows, it could be eaten up in penalties,” Hartman said.

The rest of the funding increase that takes effect next fiscal year, the remaining $170 million, is linked to updating the support rate, which covers general service and administrative costs— food, laundry, utilities, maintenance, and others — for providing resident care. This rate, and others, were years out of date, according to a report from the nursing home advocacy group Health Care Council of Illinois (HCCI).

According to that report, closures in the state were accelerating due to insufficient Medicaid rates, with three shutting down just this year. And for one operator, the closure wasn’t enough to stave off bankruptcy.

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