State with First COVID-19 Outbreak Rolls Back Medicaid Boost for Nursing Homes: ‘Needless Deaths Will Rise’

The state of Washington is cutting back on the increase it provided to Medicaid reimbursement to nursing homes, a move that drew sharp criticism from nursing home trade groups and advocates.

The news was first reported by NBC affiliate KING 5 in Washington on August 21.

As part of the Families First Coronavirus Response Act passed in March, the federal government’s Medicaid match was bolstered by 6.2 percentage points. But the increase in the Federal Medical Assistance Percentage (FMAP) was granted to the executive branches of states without any kind of conditions attached, experts told Skilled Nursing News in May.

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“The intent of the 6.2% FMAP was to fight the battle against the coronavirus spread,” Eddie Parades, senior vice president of government affairs at StoneGate Senior Living, told SNN on May 12, citing conversations with “a couple” U.S. senators. “But it was awarded to the executive branch of each one of the states, and our understanding is there were not strings attached.”

Washington state — home of the first nursing home COVID-19 outbreak in the United States, at a facility outside of Seattle — was one of the states that did end up using the increase to bolster reimbursement to nursing homes for patients covered by Medicaid.

The state distributed those funds to nursing homes retroactive to February 1, which resulted in an increase of $29 per Medicaid patient per day.

That increase dropped from $29 to $5 starting July 1, even though the public health emergency due to the COVID-19 pandemic was extended July 23.

That $29 boost covered about half of facilities’ daily COVID-19 costs, according to an August 14 letter sent to Washington Gov. Jay Inslee from LeadingAge Washington, a trade group for non-profit senior living and care providers in the state, and the Washington Health Care Association — a similar group primarily representing for-profit providers.

The letter pointed to that add-on as a sign that Washington’s Department of Social and Health Services recognized nursing homes’ need for assistance in stabilizing their finances and securing staff and personal protective equipment (PPE) when the pandemic was gathering momentum in spring.

“Without the add-on, many nursing homes would not have survived March and April; residents and staff would have quickly been outmatched and overtaken by the virus, forcing nursing homes to close,” the letter said.

There was no explanation for the end of the $29 per patient per day add-on for Medicaid patients, according to the letter, but the presumption is that it relates to a rebase and adjustment for inflation that took effect on July 1 of this year.

That rebase was approved in the closing weeks of the 2020 legislative session to address shortfalls in Medicaid funding for nursing homes, due to the reimbursement being based on 2016 costs.

A spokesperson for the Washington Office of Financial Management told SNN via e-mail that the cut to the Medicaid rates was implemented to offset a corresponding increase in the base rates.

“The nursing facility base rates were recalculated using more current cost data in July, leading to an increase in the base daily rate paid for Medicaid clients,” the spokesperson said, noting that the replies came with input from the state’s Department of Social and Health Services. “Because of this base daily rate increase, the dollar amount spent on COVID was reduced in an attempt to be fiscally responsible, as well as maintain approximately the same level of funding as was provided in the first half of 2020.”

The two associations sponsored a study to quantify the costs of COVID-19 for SNFs and found that, on average, the costs specific to the pandemic were $50 per patient per day; the costs of some PPE supplies rose significantly, according to the two groups.

After the $29 FMAP add-on ended at the start of July, SNFs received “a one time one-month add-on of $13 PPD, using CARES Act funding.” But this was for July only; on August 1, that dropped to $5, according to the letter.

This drop came even though FMAP funding is still coming from the federal government, and even as COVID-19 cases in Washington SNFs rise, with more than 400 suspected and confirmed cases per week by the end of July, according to the associations.

“By these actions, Washington State has cut COVID funding to skilled nursing providers by over 80% in the past two months,” the letter said. “Withholding public health funding to skilled nursing providers during the middle of a pandemic, with rising COVID cases and continuing staffing and PPE shortages, is unconscionable.”

The OFM, for its part, pointed to the ongoing federal relief for SNFs as a reason for the state to try to conserve what resources it could.

“While the federal funds are still going to nursing homes, and coronavirus relief funds are being used for that, there’s belt-tightening across the state budget to help prevent future cuts in funding,” the OFM spokesperson told SNN.

Deb Murphy, the president and CEO of LeadingAge Washington, told SNN separately from the letter that now is the time for providers to be stockpiling PPE supplies — not only because of the increase in cases, but because of the expected effects of the coming flu season.

“Skilled nursing facilities can not effectively compete on the open market for needed infection control supplies on $5 per resident day,” she told SNN via email. “And if we can’t purchase needed PPE and disinfecting supplies to control this infection, family visitations will cease and hospitals will be burdened with residents we simply can’t safely manage in skilled nursing. As a result, hospitals may face crisis standards of care. Most importantly, needless deaths will rise.”

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