In Fight Against Federal Medicaid Crackdown, Skilled Nursing Operators Find Allies in CCRCs

The skilled nursing industry’s opposition to a plan that could slash supplemental Medicaid programs for nursing homes began to ramp up over the last week, and as the fight moves into its next phase, SNF operators are finding allies in the senior living world.

The comment period on the Medicaid Fiscal Accountability Rule (MFAR) came to a close this past Saturday, leaving operators and advocates to play the waiting game until the Centers for Medicare & Medicaid Services (CMS) announces a move to finalize, amend, or scrap the rule entirely.

The rule would most directly affect skilled nursing providers that have come to rely on supplemental Medicaid payments — gained through such mechanisms as intergovernmental transfers (IGTs) and provider taxes — to supplement per-day rates for long-term care residents. In Indiana alone, for example, nursing facilities pull down more than $1 billion in supplemental payments, representing about 37% of total Medicaid payments for institutional long-term care services in the state.

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All told, the MFAR rule could potentially slash $50 billion in available Medicaid funding for nursing facilities, prompting industry leaders to ask the federal government to abandon the effort.

“The bleak reality is that Medicaid funding is already inadequate,” American Health Care Association CEO Mark Parkinson said in a joint statement with American Hospital Association CEO Rick Pollack. “Enacting this proposed rule would cut up to $50 billion nationally from the Medicaid program annually, further crippling Medicaid financing in many states and jeopardizing access to care for the 75 million Americans who rely on the program as their primary source of health coverage.”

But the rule could also have a knock-on effect on the wider senior living continuum, with LeadingAge — a trade group that represents non-profit senior living and care providers — warning that MFAR’s focus on provider taxes could end up harming continuing care retirement communities (CCRCs).

“Most CCRCs would not be able to absorb new taxes without cutting services, passing the new costs along to their residents or closing their nursing homes entirely,” the organization wrote in a statement calling on CMS to withdraw the rule. “In other words, older adults in CCRCs would likely bear the brunt of the proposed MFAR if finalized.”

Provider assessments, or provider taxes, benefit skilled nursing operators because the revenue can be used for the non-federal portion of Medicaid funding. But because CCRCs and other senior living facilities generally do not rely on Medicaid-reimbursed services — instead receiving most of their revenue from private-pay residents — many states with provider taxes have instituted waivers that exempt these properties from having to pay into a program from which they do not benefit.

MFAR would prevent states from picking and choosing which senior housing and care facilities can be subject to a provider tax, a restriction that would present lawmakers with two options: scrap the tax entirely and remove the funding source for nursing homes, or pass a new tax that includes CCRCs.

“The proposed MFAR poses a serious threat to CCRCs in states with SNF provider tax waivers that exempt these communities from the tax or assess them at a discounted rate,” LeadingAge concluded.

In fact, many of the comments on the rule — which totaled 2,841 as of 5 p.m. ET on Friday — came directly from residents at CCRCs across the country.

“In the CCRC, the primary revenue source is fees collected from its residents,” one response reads. “Estimates will be an additional $1,000 to me, a cost I cannot bear.”

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