Congress may cut Medicaid provider taxes for nursing homes as a part of budget reconciliation, significantly impacting the sector as many providers rely on this avenue of reimbursement for crucial services and resident resources.

These taxes are a key funding tool: providers pay a fee, matched by federal dollars, to support state Medicaid programs. But the program’s critics want to reduce or eliminate these taxes, while industry leaders argue this would further strain already underfunded systems.

“A cut is a cut is a cut,” said Clif Porter, president and CEO with the American Health Care Association and National Center for Assisted Living (AHCA/NCAL), who is deeply concerned about the ramifications of these cuts and the discussions currently taking place on the Hill.

Porter, who sat down with Skilled Nursing News on Friday, said some members of Congress have said they don’t like the way the program is managed and look to “dial it back” or do away with it completely.

For its part, AHCA/NCAL has touted Medicaid provider taxes as a legitimate funding mechanism for nursing homes across most states, Alaska being the exception.

But for the Republican-controlled Congress and Trump Administration, it could be just another way to root out cases of fraud, waste and abuse within areas of government, along with $880 billion in Medicaid cuts over a decade and potential elimination of health care workforce programs focused on geriatrics and other aging services.

“Right now, we’re hearing about a reduction, not an elimination, of the [provider tax] ceiling, which is currently 6%,” Porter said of the program. “There’s a list that was circulated early on in the process that more or less talked about reducing the program down to zero.”

As the debate rages on over potential Medicaid cuts and while AHCA/NCAL keeps a close eye on the situation, Porter said there are some positive signs.

“The President has taken the position that he doesn’t want to cut Medicaid or Medicare – that’s an important starting point, and one that I think in some ways is unprecedented, particularly compared to other Republican administrations faced with this opportunity. We’re encouraged by that,” he said.

In his interview, Porter discussed nuances of the complex, yet integral Medicaid tax program for nursing homes, the fate of the staffing mandate as well as efforts to modify fast-approaching surveyor changes and off-cycle revalidation paperwork requirements due this summer.

Overall, Porter said the main focus for the association right now concerns potential cuts within the Congressional budget, and once the budget is settled, it will be all hands on deck reintroducing staffing legislation to further rebuild the nursing home workforce.

This conversation has been edited for length and clarity.

SNN: Congress is considering reducing Medicaid provider taxes in budget reconciliation talks. Tell us more about what these are.

Porter: Provider taxes are an important tool in states’ toolboxes to fund the Medicaid programs; many states use the program. Providers pay a fee and the federal government matches that fee, and then that match is used to fund Medicaid in the state.

There is a very detailed and prescriptive approach to being able to access this tool. It’s not something that can just simply be done at the purview of a state on their own. They have to get federal approval, they have to get state approval within their own legislatures and governors. And then, the Centers for Medicare and Medicaid Services (CMS) has to approve the program and then has to reapprove it periodically thereafter.

It’s not a straightforward program like traditional Medicaid programs, where what you spend on your Medicaid patients, the federal government automatically matches it.

SNN: Why is it on the chopping block, or being considered for reduction?

What we’re learning is the provider taxes are top of mind for Congress members, mainly because they’re trying to think about different ways to render savings in the program, and there’s been some quadrants in the super conservative policy world that don’t like the way this program is managed or handled. They’d like to dial it back or to do away with it.

Right now, we’re hearing about a reduction, not an elimination, of the [provider tax] ceiling, which is currently 6%. There’s a list that was circulated early on in the process that more or less talked about reducing the program down to zero.

We’re doing everything we can to just make sure that policy makers understand that it is indeed a legitimate funding tool and not necessarily what some of these policymakers want to paint it to be.

SNN: Medicaid provider taxes sound complex. How necessary are they for the nursing home industry?

It’s a significant amount of resources that the federal government provides to the states, and without it, services get hindered, and patients don’t get the resources that they need. 

A cut is a cut as a cut, right? Ultimately, any federal reduction in Medicaid support to a state trickles down to the patient because the state has to decide what they’re going to do with their resources. If they have less resources, that usually results in some reduction in services or coverage.

SNN: How do you expect such a reduction to affect nursing home providers?

The short answer is that if federal matching funds get reduced, they will have an impact on the [Medicaid] rates. If there’s a lower rate in a system where we’re only reimbursed on average 82 cents on every dollar – and we are already underfunded – it makes bad things worse.

SNN: Anything else you want to add about the budget reconciliation process and potential Medicaid cuts?

I want to start with the fact that we’re encouraged. The president has taken the position that he doesn’t want to cut Medicaid or Medicare – that’s an important starting point, and one that I think in some ways is unprecedented, particularly compared to other Republican administrations faced with this opportunity. We’re encouraged by that.

We’re watching the process very, very closely and trying to make sure there aren’t cuts in the Medicaid program, as the president stated, except in the cases of fraud, waste and abuse. We’re doing everything we can to educate people to understand that provider taxes are neither fraud, waste, nor abuse.

We’ve got a significant number of our members flying in to Washington, as well as meeting with Congress members in their facilities to talk about this issue, about how Medicaid tax reductions could potentially impact their operations.

SNN: Jumping to the recent court win regarding the federal staffing mandate, any insight on what might happen from here?

I don’t want to try to guess, but what I will say is that we’re obviously very encouraged by the decision in the Texas case. Staffing standards are in statute already. Congress has made their intent very clear, and CMS doesn’t have the authority to deviate from that.

SNN: And touching on survey backlogs and surveyor changes due to be implemented on April 28, how has AHCA been representing member needs?

We’re advocating that the changes should absolutely be modified. Some of the changes are not necessarily positive and don’t improve quality. We want to make sure that changes actually do improve quality. As it stands right now, they’re due to be implemented this month. We’re hoping to get some more time to improve the suggestions around survey changes, but that remains to be seen.

SNN: Any other updates or changes for nursing home operators, based on talks with Congress members?

Our biggest concern at the moment, as it relates to Congress, is this issue with Medicaid and reconciliation, so our focus has been on Congress members understanding that the Medicaid provider tax program is already underfunded and that any other reductions would further impact negatively on care.

Once we get past the reconciliation process, we’ll be working on some additional legislation that will help with our workforce issues. We’ve had a couple of bills in Congress in the past that we plan on reintroducing that will hopefully help us be able to train more nursing assistants in our facilities as well as get additional support to caregivers and facilities, because that’s still a serious issue for us.

SNN: Lastly, the deadline to file off-cycle revalidation paperwork was pushed from May 1 to Aug. 1, a welcome relief since about 80% of facilities haven’t submitted what’s needed. Thoughts on the requirement and ways to make it more feasible for providers? 

It’s just onerous … there’s no other way to put it. The level of reporting is beyond onerous. We need to get to the intent of the statute, which is to make sure that the public and government knows who owns facilities and who operates them.

That should be what we report. It shouldn’t be about what vendor you have doing your housekeeping work, or knowing every time you change out a department head. The good news is, they’ve obviously moved that date out and heard our concerns. It’s our goal to try to work with them to moderate that expectation, so that the intent of the law can be fulfilled without creating such a burdensome environment for our providers.

If you don’t comply, you lose your Medicare certification; that’s a death blow. Hopefully, we can be successful in moderating some of those expectations to be a bit more realistic between now and the new deadline.