Nursing Homes Can Secure Medicaid Boosts, But Operators Must Promise Quality Gains in Return

The majority of patients at any nursing facility have their care covered by the Medicaid program of any given state, and those rates are notorious for being insufficient to cover the cost of the services those patients demand — to the point that operators from multiple states can argue near-simultaneously that it is theirs with the lowest reimbursement.

In fact, several operators have cited low Medicaid rates as a driving force in closures or low wages for staff.

The state of Oklahoma was among the many states with a low Medicaid rate, and it was able to secure an increase in the state’s reimbursement for long-term care in 2019.


However, that push to secure a Medicaid increase wasn’t the first time the nursing home sector in the state had tried. An attempt during the 2018 legislative session failed, while several cities in the state took on nursing home licenses as part of an effort to become eligible for supplemental payment programs — a move that the Centers for Medicare and Medicaid Services (CMS) ultimately rejected.

A critical part of the successful process was making a commitment to quality improvements, Scott Pilgrim, the CEO of the Diakonos Group, and Eddie Parades, senior vice president of government affairs at StoneGate Senior Living, explained during Skilled Nursing News’s virtual Payments, Policy, and Capital Summit last week.

Diakonos operates SNFs and senior housing communities in Oklahoma, while StoneGate has locations in Texas, Oklahoma, and Colorado.


“We had tried … to make a significant argument for a significant rate increase based upon quality and value-based methodologies,” Pilgrim said on February 2. “And quite honestly, we failed. We failed because we didn’t have what we call all the ornaments on the tree. We failed because we didn’t build a coalition that we needed to build to push this through.”

Parades pointed to another major factor in the first failure of Oklahoma’s nursing home providers, one that could have implications for SNFs across the country as they try to lobby for Medicaid support amid the fallout of a pandemic that has ravaged economies from top to bottom.

“One of the reasons why we failed … is we went to the capital with our hands out and said: You need to pay us more because our costs are low,” he said during the panel. “And we made a mistake on not giving value in return, and [not having], as Scott said, a coalition.”

What that means for SNFs looking to make a case for increased Medicaid reimbursement to their state governments is this, Parades explained: Find out the issues that are important to specific committee chairs. Find out what is important to the agenda-setting lawmakers. In Oklahoma, the SNF sector approached the local AARP and ombudsmen, as well as non-profits, to research issues that were important to them in terms of nursing home quality.

“I think that was the key part, it just wasn’t adding quality or value-based [metrics] to achieve the rate increase,” Parades noted. “It was strategically designed on what those requests were, so that it would move our request forward.”

This aspect of considering issues of nursing home quality that are important to a range of stakeholders is vital — both to achieve the goal of improving care, and given the reality that SNFs can expect major changes in oversight amid the pandemic and its aftermath.

“In our discussions with leadership on Capitol Hill, the advice that they have given us has consistently been the same, which is: You guys better have a plan,” Mark Parkinson, the president and CEO of the nursing home trade group American Health Care Association, said during a different summit panel. “If you don’t have a plan, you’re going to have a plan thrown upon you.”

Oklahoma’s nursing homes provide a template of sorts for how operators might craft such a plan. In 2019, SNFs developed a program with a rate increase and “significant value enhancements” within it, Pilgrim said.

“The portion of the rate increase that was tied to value, though, was actually relatively small compared to the overall rate increase,” he said. “But the fact that we put on the value-based portion of this allowed us to drag along the more significant overall rate increase, to bring us up at the time to cost.”

Oklahoma’s Medicaid reimbursement now incorporates four metrics, specifically the four federal nursing home quality measures on which the state was performing the worst: pressure ulcers, urinary tract infections, use of antipsychotics, and weight loss among nursing home residents. These metrics, however, might change as nursing homes improve their performance, Pilgrim noted.

Nursing homes that are at least above the federal average, or have made improvements over time in those metrics can make roughly $1.25 extra per patient per day for each metric — for a total of $5 a day if they exceed on all four, Pilgrim said. But in addition, any facility in the state that does not meet all those these metrics has those extra funds budgeted by the state “put back in the pot” for other facilities, he said.

“So right now, this last quarter, I think, if you achieved as a facility, all four those metrics, you can get an extra [roughly] $7.48,” he said. “And I know almost all of [Parades’] buildings and almost all my buildings, we get all four of those metrics.”

But to achieve this rate increase, the nursing homes committed to some key components — even though they did not necessarily generate additional reimbursement, Pilgrim said. This included additional Alzheimer’s training, an issue important to the Alzheimer’s Association and several of the key lawmakers in the state; allowing a 24-hour staffing ratio, compared with a shift-by-shift ratio; adding additional ombudsmen through the state so they were not reliant solely on volunteers in some markets; and raising the resident personal needs allowance by 50% for Medicaid patients.

These elements were narrowed down from about eight or nine, given the different desires of the various stakeholders, Parades noted, but the number was eventually winnowed to those that would move lawmakers to push the bill through the legislature. That allowed for a wide range of voices speaking up for the bill.

“Putting all of those ornaments on on the Christmas tree really allowed us to pull together a large coalition of stakeholders to not only endorse, but to actively support and push our legislature for that bill,” Pilgrim said.

That included direct marketing to lawmakers by the group set up to help support the bill, the Oklahoma Health Action Network, which crafted an e-mail and social media campaign that targeted specific lawmakers. This targeting helped the campaign on Medicaid stand out from from e-mails in more typical electronic lobbying.

“It was a little bit scary how targeted this could be,” Pilgrim said. “For example, we could, in social media ads — if somebody is sitting in the capital, in Oklahoma, we can steer all of our ads and all of our dollars to somebody that’s sitting at 23rd and Lincoln [in Oklahoma City], which is interesting. But you can dial it down enough that we targeted these ads to the actuals reps’ and senators’ home addresses. So when they sat down in the evening, and put their feet up in the recliner, and pulled their computer out, they were deluged with our ads, and the person 10 houses down wouldn’t necessarily get that ad. So we were able to be very efficient in our spending.”

And with the success of the bill, Oklahoma’s nursing homes have since beaten the national average in three of the four QMs, as a state, with progress on the fourth one, he added.

“So we’ve not only driven reimbursement, but we’ve driven quality,” Pilgrim said. “And that tide has raised all boats.”

For SNFs in other states trying to draw lessons from Oklahoma’s success, Parades strongly recommended that SNFs identify the nursing home quality issues important to the key lawmakers, such as whether the chairman of a state Senate finance committee is passionate about Alzheimer’s disease or mental health issues – to say nothing of identifying the key legislative leaders who can move a bill forward.

And with the spotlight on nursing homes during the COVID-19 pandemic, he strongly recommended SNFs seize the moment to address quality measures related to infection control.

“In my opinion, related to COVID, strike while the iron is hot,” Parades recommended. “Right now, we have never had greater exposure than we do today. It seems to me …. the buzzword is infection control. The more you can build your quality measures geared toward infection control, the more you probably can help your current federal compliance, your future federal compliance, and also earn quality payments at the same time.”

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