States are in the midst of considering changes to their Medicaid policies as federal funding gets phased out with the end of the public health emergency, and some states are hoping to rebase Medicaid reimbursement rates for nursing homes to mitigate challenges facing the sector.
Montana is one of those states. After a study commissioned by the Montana legislature found that Medicaid providers in the state were being reimbursed at rates much lower than the cost of care, Republican Gov. Greg Gianforte proposed increases to the rates, although his proposal’s rates are lower than the report’s recommendations.
The action in Montana comes as some industry veterans believe that the skilled nursing sector is at a one-in-a-generation moment to push for more sustainable Medicaid reimbursements. Illinois and Pennsylvania are among the states that have pushed through such policies. But the stakes are especially high in rural states that have faced a rash of closures recently, as financial and operating pressures — including severe labor shortages — have become overwhelming.
In fact, for some operators, their ability to remain open hangs in the balance.
After 11 closures in Montana due to pandemic related financial struggles, nursing home administrator Wes Thompson told Kaiser Health News that local tax levies – mounting to an estimated $300,000 a year for three years – helped keep his facility afloat.
KHN reported that legislators drafting the state health department budget included rates higher than the governor’s proposal, but still not enough for nursing homes to cover the cost of providing care. Those rates are subject to change as the state budget bill goes through the months-long legislative process, though majority-Republican lawmakers so far have rejected Democratic lawmakers’ attempts for full funding.
Separately, Senate Bill 296, a bipartisan bill going through Montana’s legislature, aims to generate more federal funding to nursing homes and assisted living facilities by directing health officials to consider inflation, cost-of-living adjustments, and the actual costs of services in setting Medicaid reimbursement rates.
“We need to stop the attrition,” Republican Sen. Becky Beard, the bill’s sponsor, told KHN.
Yet some industry experts think the bill will not do enough to prevent nursing home closures.
“Increasing Medicaid rates for inflation is going to have positive effects, but there’s no way that it’s going to compensate for what we’ve experienced in the last several years,” Sebastian Martinez Hickey, a research assistant at the Economic Policy Institute, a nonprofit think tank, told KHN.
To facilitate wage staff increases, Colorado, Illinois, Massachusetts, and North Carolina are among the states that have adopted laws or regulations since the pandemic began. Meanwhile, Michigan, North Carolina, and Ohio adopted increases or one-time bonuses.
Local nursing home advocates believe that the current problems confronting the sector, including low wages that impact recruitment and retention of workers, are linked to Medicaid rates.
“It’s trying to deal with systemic problems that exist in the system so that longer term the reimbursement system can be more stable,” Rose Hughes, executive director of the Montana Health Care Association, told KHN.
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