Nursing Homes Must Advocate for Medicaid Increases, as States Work En Masse to Rebase Rates

The past year or two have seen big wins in terms of increased Medicaid funding for nursing homes – a welcome relief as the sector faces staffing shortages amid a looming minimum staffing proposal, higher inflationary costs and rising acuity of resident needs.

The American Health Care Association and National Center for Assisted Living (AHCA/NCAL) has advised operators to advocate for themselves as states conduct routine Medicaid rebasing, especially in the aftermath of a shift from therapy-based reimbursement to case-mix, Patient Driven Payment Model (PDPM) versions to better align with Medicare. 

From a Medicaid perspective, operators and the associations that represent them must ensure these themes get built into the rebasing processes, noted Martin Allen, senior vice president of reimbursement policy for AHCA/NCAL, during the association’s annual conference in October.

Meanwhile, Mark Parkinson, president and CEO of AHCA and the National Center for Assisted Living (NCAL) said last year that it was a “big priority for 2023” to get all 50 states to revisit and ultimately adjust their Medicaid rates.

Experts from AHCA also emphasized closer participation to push for Medicaid rate increases by operators given that it’s still tough going for many in the industry. Medicaid rates and the methodology behind calculating them must account for acuity and increased costs of care, they said.

“We know that Medicaid periodically rebases in a situation like a pandemic. We have to be very careful about the dollars associated with the next rate cycle – case mix index is associated with that as well,” Allen.

Acuity levels are still high and patients are coming into buildings sicker, even though buildings may not be dealing with the Covid diagnosis as much, he said.

Both state and national associations are working to get more permanent state Medicaid rate increases as part of state rate-setting methodology with about half of the states typically rebasing Medicaid rates on an annual basis.

Below are updates to Medicaid rebasing in eight states across the country – Skilled Nursing News will publish the remaining state Medicaid rebasing efforts in the coming weeks. We’ll also work to update the states below as new information comes in.

Texas

The Lone Star state has been the talk of real estate investment trusts and operators alike in the nursing home space, with a $911 million general Medicaid rate infusion through the General Appropriations Act for the 2024-2025 cycle.

Facilities in the state have not seen any sort of Medicaid increase in a decade.

The funding was long awaited and welcomed by providers in Texas, where Medicaid reimbursement rates rank among the lowest, usually 49th or 50th in the country, according to Texas-based Cascade Health Services CEO Ron Haney.

Another crucial measure approved in the state provided bridge funding to maintain a $19.63 add-on until August 31.

Kentucky

Kentucky Gov. Andy Beshear approved a $99.6 million boost to daily Medicaid rates, or an overall adjustment of about 8% on average, until more permanent rebasing falls into place.

Kentucky Medicaid and provider groups are currently working collaboratively toward a 2024 rebasing. The state has seen inflation-only adjustments since 2008, amounting to increases as small as 0.1%. The current average daily Medicaid rate is $221.20, including a $29 per day add-on since January 2020.

Pennsylvania

The state won a significant 17% increase in its Medicaid rate in 2022 after no increases for a decade, similar to Texas. Associations were able to secure a smaller increase this year after lawmakers initially proposed no increase in 2023.

Florida

Florida’s big rate increase already occurred in 2022, with a $293 million bump in the state budget.

Florida’s next legislative session starts in January to determine any other additional Medicaid funding, Kristen Knapp, senior director of strategy and communications for the Florida Health Care Association (FHCA), told SNN.

“The Florida Legislature has provided Medicaid increases to our nursing centers over the past few years, recognizing the important connection between being properly funded and enhancing quality care. For that we are grateful,” said Knapp. “However, our sector lags behind in rebuilding our workforce because we are still lacking the ability to compete with hospitals and other providers when it comes to wages and benefits that help attract and retain nursing staff.”

Over the past three years, Florida providers have increased CNA pay by nearly 25%, more than 20% for LPNs and almost 18% for RNs, she added.

Wisconsin

Wisconsin is one state with a more permanent solution for its Medicaid population – increases in its 2021-2023 budget will be maintained in the future since it was added to the state’s rate-setting methodology, according to the Wisconsin Division of Medicaid Services’ Methods of Implementation for Nursing Home Payment Rates document.

The increase brings Wisconsin’s direct nursing care component of the rate to 125% of median cost.

Minnesota

Minnesota has been getting an 8% increase on average each year. But, each boost is considered a one-time situation, according to Patti Cullen, CEO and president of the Care Providers of Minnesota.

“We’ll get increases, but they’re going to be delayed because we have a 21-month delay factor. Increases are based on Covid expenses, because we have a 21-month delay in between costs and rates,” said Cullen.

New York

In New York, nursing homes received a 7.5% increase in Medicaid rates for 2023-2024, but state associations are still putting the pressure on for the 2024-2025 budget, which is set to be presented by Gov. Kathy Hochul in January.

Namely, associations are asking the state to reform nursing home reimbursement methodology for the 2024-2025 budget, according to a joint letter dated Nov. 3. A down payment of $510 million to preserve care quality has also been requested, pending a more comprehensive update to methodology.

In March, associations such as the New York Health Facilities Association (NYSHFA), were calling for a 20% increase in Medicaid reimbursement to help fund the minimum staffing requirement in the state. And while, Gov. Hochul had proposed a 5% increase, the state Legislature countered with 10%. Regardless, associations said both funding proposals would still leave nursing homes struggling.

In terms of rebasing, the state hasn’t seen a change in the calculation of Medicaid rates for 15 years, according to a report in the Buffalo News, while most states do an adjustment every two or three years.

Today’s rates are based on 2007 costs, associations said, resulting in an $810 million shortfall accumulated over these 15 years.

California

The state’s Medicaid program, Medi-Cal, reimburses nursing homes under a rate setting system developed in AB 1629 and amended in AB 186 in 2022. The amendment established a Workforce and Quality Incentive Program to provide $280 million for providers that meet specific workforce and quality measures., along with a one-time augmentation to the reimbursement rate for facilities that meet certain workforce standards.

A Quality Assurance fee is paid by facilities, which is matched by federal funds – the system has generated more than $5 billion in state funds. Medi-Cal reimbursement comprises on average more than 70% of patient census.

State associations have called for a guarantee that such quality payments are distributed annually, and that California rebase Medi-Cal rates to more broadly support workforce investments.

AB 186 offered an opportunity to have rates rebased based on the ability to meet certain workforce standards, but it’s essential that the state establish workforce standards that are broad-based to ensure as mand providers as possible are able to increase wages for workers and receive rate adjustment to reflect their true labor costs, the California Association of Health Facilities (CAHF) said in a statement.