Skilled nursing operators in the state of Texas have had a lifeline in the form of an add-on to the daily reimbursement rate for their Medicaid patients, one that dates back to the earliest months of the COVID-19 pandemic.
Now, with COVID-19 cases down precipitously from the beginning of 2021, it’s not clear how long that lifeline will be offered – though some operators in the Lone Star State are hopeful it will continue through at least the end of the year.
The base rate for Medicaid reimbursement for nursing homes in Texas received an add-on of $19.63 per patient day in April of 2020. Those funds aimed specifically at addressing the increased dietary and labor costs associated with the pandemic, StoneGate Senior Living Senior Vice President of Government Affairs Eddie Parades told Skilled Nursing News.
“When that legislative budget board was passed, signed by the Governor, it states ‘through the duration of the federal public health emergency,'” Parades told SNN. “So it will last through that.”
The concern for many operators in Texas is that if the public health emergency is ended before the year is out, there will not be enough time for them to recover financially. Occupancy in SNFs across the U.S. has been hammered by the pandemic, whether from the suspension of elective surgeries to reduced admissions due to negative headlines about COVID-19 in SNFs. But SNFs in Texas were particularly badly hit.
One update, from the professional services firm CliftonLarsonAllen (CLA), tracked occupancy through the end of February and found Texas median SNF occupancy to be one of the lowest in the U.S at 55.9%. And according to a large regional operator source in the Lone Star State that asked to remain anonymous due to the fear of retaliation by state officials, nursing home census in the state is still down around 20%.
In a January letter to governors from the Department of Health and Human Services (HHS), then-acting secretary Norris Cochran told governors that the PHE is likely to remain in effect through the end of 2021. He also said that “when a decision is made to terminate the declaration or let it expire, HHS will provide states with 60 days’ notice prior to termination.”
HealthLeaders covered the letter in February.
It is this message that gives Texas providers the “informal, assumed assumption and hope” that the $19.63 add-on will continue as long as the PHE continues, through the end of the calendar year, Parades told SNN.
The public health emergency was extended by HHS Secretary Xavier Becerra on April 21; it is currently scheduled to expire in July, and so far there has been no notice from HHS that it will end, Parades told SNN.
But providers in the state are still uneasy. Texas’ legislature meets every other year, and when the most recent legislative session failed to implement a runway of aid to nursing homes to help with COVID-related losses, it raises the question of financial viability for many SNF providers, according to the anonymous operator.
The increasing costs of labor – from recruiting costs to retention bonuses to agency staffing – and food are just two examples of the ways the operating landscape for SNFs is still impacted, Kevin Warren, the president and CEO of the Texas Health Care Association, told SNN. Supply costs also remain a problem, with the cost of personal protective equipment (PPE) increasing “two- and three-fold.”
Those costs are not going to abate because the public health emergency comes to an end, he pointed out.
Providers in the state requested a budget rider to extend the $19.63 Medicaid add-on past the end of the public health emergency, and while the state House approved it, the Senate did not, Parades said.
“As far as we are aware, today anyway, there is no legislative will to extend our $19.63 past the public health emergency,” he said. “This will place a tremendous additional financial burden and hardship on the nursing homes in the state, because we already have a payment gap, and this will only add to it.”
The American Rescue Plan, which was signed into law in March, included some direct aid to nursing homes. But it also included federal stimulus funds for states to use at their own discretion, and Texas will be holding a special legislative session to earmark those funds, roughly $16 billion, Parades said.
“We’ve started work in meetings already to target a benefit to the nursing homes,” he told SNN. “Part of our ask is going to be to continue that add-on for calendar year 2022.”
There are some specific requests, such as workforce support and modernization, as well as some possible direct care items, for the funds, he said. Texas has now had eight years without an increase to the Medicaid base rate, Parades told SNN, but he is hopeful that some funds will be allocated to nursing homes to help with the costs of COVID.
But the failure to secure a more permanent form of financial help in the state’s budget has left the anonymous operator wary of counting on the state, given that Texas Gov. Greg Abbott and other elected officials had told nursing home providers that the state recognized their efforts amid the pandemic and understood the important role SNFs played in the care continuum.
That made the failure of an increase sting all the more, and it’s making operators lose confidence.
“I don’t believe the leadership in Texas is going to do anything to support nursing homes or the inherit shortcomings in their funding,” the anonymous operator told SNN. “Our state officials have failed to provide an increase to nursing home funding in a decade, even to bridge the gap caused by inflation. As a result, Texas boasts the lowest Medicaid reimbursement in the country driven by politics versus economics.”
Parades is hopeful about the prospects of getting some portion of the federal funds allocated to Texas in the American Rescue Plan, and for both him and Warren, it is essential that some kind of allocation from the state recovery funds go to SNFs.
“If there is not a resource allocation … then there is a significant cost, and quite candidly, I’m very concerned about some providers in Texas and their ability to maintain operations beyond the year,” Warren said.
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