Despite improvements to the Medicaid rate in recent years, the state of Illinois’ reimbursement hasn’t kept up with rising costs for skilled nursing facilities — especially at a time when operators need to keep upping their wages to compete with other industries.
While the next wave of the Provider Relief Funds is expected to infuse some much needed capital into long-term care, some in the skilled nursing space see it as nothing more than a stopgap to fix some of the larger financial challenges operators face.
To really get at the heart of the issue, state-by-state Medicaid reimbursement reform may be needed, according to Kevin McInerney, chief personnel officer and government affairs at Skokie, Ill.-based Legacy Healthcare.
“On the state level, Medicaid reimbursement tends to be at the forefront,” McInerney said.
“It’s not all about the dollars, but with that money you’re able to do all kinds of other things like increase wages and fund initiatives to drive staff into health care,” he added.
McInerney represents Legacy Healthcare’s interest in the state legislature and right now is focused on improving Medicaid reimbursement for skilled nursing.
“There’s so many problems that exist that can be solved with some more money that it’s hard not to make Medicaid the focus,” he noted.
While the reimbursement rate has been increased a few times in the state since 2014, it’s still “not adequate” or where it needs to be for the work being performed. Nursing facilities receive a single payment per day per resident and the per diem is specific to each facility. Three components make up the daily rate for each Medicaid resident: direct care, support and capital with a base rate of $85.25.
LeadingAge Illinois is working with the Illinois Department of Healthcare and Family Services to try and close the gap.
In a proposal brought to the Illinois General Assembly late last month, the two are seeking to reform the nursing facility rate used by the Medicaid program in the state as a long-term fix for some of the problems the sector faces.
Medicaid pays for approximately 60% of all nursing facility days in Illinois and is the largest payor of days in both the state and country.
“Nearly two thirds of all patients in nursing homes are Medicaid,” McInerney said. “It represents the largest percentage of nursing home patients in the country and is the lifeblood of these facilities.”
The rate reform proposal is designed to improve staffing, Angela Schnepf, LeadingAge Illinois executive vice president,explained.
The proposal recommends that two-thirds of funding be dedicated to staffing increases and workforce transformation, with the remaining one-third used to reward providers for achieving higher levels of care and for evolving and upgrading quality metrics over time.
“We’ve been trying to come to a consensus on what the tax should be to drive up the revenue, and what the payments should be targeted towards,” Schnepf said. “We believe the majority of the payment should go towards supporting things that drive outcomes like staffing.”
She said that currently facilities are spending more on staffing and for residents than what Medicaid pays.
All told, since 2014, the state has increased annual reimbursement for nursing homes by $330 million, including $170 million for the support rate in 2019 and a total of $160 million for staffing, according to the Illinois Department of Healthcare and Family Services.
Of the $160 million dedicated to staffing, $30 million was added in 2014 with an additional $60 million added in 2020.
Nursing homes with the largest Medicaid footprint did no better than tread water in staffing following the rate increase, according to the state governmental agency, and following the onset of the pandemic have consistently reported great difficulty in recruiting and retaining staff.
“We certainly appreciate the improvement, but it’s still not adequate,” McInerney added. “We’re trying to negotiate for what we believe is a realistic ask.”
He said that an even higher reimbursement increase, around 25 to 30%, would go a long way for operators in the state.
“For Medicaid we are about 70 cents to 77 cents on the dollar, so a 25 to 30% increase actually gets us pretty close dollar for dollar in terms of the costs and the reimbursement,” he added.
Wesmont, Ill.-based Burgess Square Healthcare and Rehabilitation Centre CEO John Vrba felt 20 to 30% would be adequate, but stressed that the increased reimbursement needs to be used for what it’s intended.
“I would say the government needs to in every state look at the needs of their long-term care and post acute facilities in their state and dedicate … whether it’s 20% or 30% … and make sure that money is used towards staffing,” he said.
“They need to give us dollars to increase our staffing in this dire time of need because nobody has enough staff,” Vrba added.
Burgess Square currently has a unit of its facility closed currently due to not having enough staff to provide care.
“It’s a 15 bed unit. We have to have three shifts for a nurse and depending on acuity we would add another nurse plus CNAs so you have to take the salary of three nurses and three CNAs and do that times 365,” he said. “And that’s just what we need to staff that unit.”
Aside from state-by-state reimbursement reform, Vrba wants to see a commitment from the federal government to improve nursing home staffing with incentives for LPN programs and free tuition to drive young people into the industry.
“It’s dumbfounding to me that the government does not understand that this is a true crisis, like COVID, the second crisis is staffing our nursing homes and hospitals,” he added.
Companies featured in this article:
Burgess Square Healthcare and Rehabilitation Centre, LeadingAge Illinois, Legacy Healthcare
