New York Nursing Homes ‘in Limbo’ as $246M in Medicaid Cuts Hang in the Balance

A plan to significantly change New York State’s Medicaid reimbursement model for nursing homes remains up in the air, leaving operators wondering if they could face retroactive cuts to the tune of millions of dollars.

Back in June, New York officials filed a state plan amendment (SPA) with the federal government that would make changes to how it calculates Medicaid reimbursement for skilled nursing facilities. The move stemmed from a provision in the state’s 2019-2020 budget, which empowered the state health commissioner to create a working group tasked with changing Medicaid case-mix adjustments for nursing homes, effective this past July 1.

But the state has yet to move forward, since it’s waiting for approval the Centers for Medicare & Medicaid Services (CMS). The workgroup, meanwhile, had its final meeting on June 27 and filed its report to the state the following day, expressed “grave concerns” with the changes that the Department of Health (DOH) proposed.

The DOH is specifically moving to change its calculation for SNF reimbursement for Medicaid residents from a snapshot system — which uses two dates in January and July — to one that considers all Minimum Data Set (MDS) assessments submitted by SNFs to the federal government from August 8, 2018, through March 31, 2019.

The state projected that it would see $246 million in gross budgetary savings because of the changes.

There has been no communication from the department regarding the workgroup and whether it might reconvene, according to New York State Health Facilities Association (NYSHFA) president and CEO Stephen Hanse.

“To date, we have not received any of the requested data,” he told Skilled Nursing News. “It leaves nursing homes in New York in significant limbo.”

The problem with switching from the snapshot system to one that uses all MDS assessments, according to critics, is that there are key reimbursement add-ons for Medicaid rates beyond assessments — and changes to patient condition — that would require even more MDS work by nurses, Dan Heim, executive vice president at LeadingAge New York, told SNN in June.

Labor is another challenge; many SNFs entered collective bargaining agreements with unions that could be jeopardized by the cuts, Hanse told SNN.

State officials respond

The impact of the cuts — which are not finalized but would be retroactive to July 1 of this year — is significant, according to Hanse, with some providers indicating that they will not be able to make payroll should they take effect.

How CMS will respond to the SPA remains to be seen. But in the meantime, state senators have called for a delay of the rate changes, arguing that the work group never got to see crucial data from the DOH.

“It is our understanding that the Workgroup members never received the case mix data or related analyses to review,” the state senators wrote in their letter to Robert Mujica, budget director for the state of New York. “Instead, the Department [of Health] announced at the Workgroup’s first meeting their intent to move forward with the methodology initially proposed, resulting in severe cuts to nursing home rates without the required analyses, review and Workgroup input mandated by the law.”

Nursing homes in Orange, Ulster, and Sullivan counties could lose an estimated $6 million in Medicaid funding because of the cuts, the Times Herald-Record reported Monday. Jeffrey Hammond, a spokesman for the New York DOH, told the publication that the department does not expect any disruption to residents or their care.

According to the workgroup’s June 28 report, the DOH never provided the case-mix data and related analyses it conducted to arrive at the $246 million estimate.

“The $246 million in gross savings is due to the fact that assessments vary drastically between the current method of using one assessment versus utilizing all available assessments,” DOH spokeswoman Jill Montag said in a statement provided to Skilled Nursing News in June.

Policy and procedural concerns

The NYSHFA, the state’s affiliate of the nursing home trade group American Health Care Association (AHCA), has several concerns with the way New York proceeded, Hanse told SNN. For one thing, the change appears to have stemmed from differing interpretations of the language that created the workgroup, he said in June.

For another, the state has never implemented a retroactive change when changing case mix methodology, he told SNN earlier this month.

“The state has always historically explained what the change is going to be,” he said. “Providers had the opportunity to be educated and understand, and it was implemented prospectively.”

More specifically related to the SPA filed with CMS, the NYSHFA and other stakeholder groups argue that the state’s public notice didn’t include enough information to ensure that stakeholders could provide meaningful input. A notice published by the DOH on the New York State Register on March 27 of this year included a lower estimate — $191 million — for the decrease in gross Medicaid expenditures.

Stakeholders including NYSHFA and LeadingAge New York, argued that the wording in that notice does not describe the proposed change, or explain why the change is being implemented by the DOH in the first place.

The groups also argued that the change in methodology proposed in the SPA isn’t authorized by the budget provision calling for the convening of the workgroup, noting that the workgroup should have been able to review case mix data and related analyses that the DOH conducted — and was never able to do so.

In addition, even though the language in the budget prohibits modifying the method for determining the case mix adjustment for periods prior to June 30, 2019, the approach proposed by the DOH would do just that, by using unrepresentative assessment data from August of 2018 to March 2019, the groups have asserted.

The state senators, in their letter to Mujica, also raised questions about the SPA filed with CMS on June 28.

“Pursuing this particular SPA, as opposed to others filed over the last few years that have yet to be implemented and for which the state also assumed savings, raises questions,” they wrote. “Those SPAs filed much earlier could be pursued to accomplish savings and provide the necessary, appropriate and required time to ensure the proposed changes to the case mix/acuity methodology is carefully considered.”

That letter called on Mujica to reconvene the workgroup, provide the data and analyses, and allow for a thorough review of the effects of the change.

The net result is that NYSHFA and others are focusing all of their efforts on ensuring that policymakers and understand the impact of the cuts.

“We recognize the state is facing a Medicaid deficit,” Hanse said. “That deficit is not a consequence of nursing home spending.”