Medicaid Cuts Could Force Most Oklahoma Nursing Homes To Close

A state association of health-care providers claims up to 93 percent of Oklahoma nursing homes will cease operating if a 25 percent cut in the Medicaid rate goes into effect, creating a crisis for Oklahoma families and jeopardizing 16,900 jobs.

This could place about 16,800 elderly and disabled patients at risk of being displaced from their nursing homes.

The decision by the Oklahoma Health Care Authority to slash the rate came last week as the state slips into a deepening revenue failure, estimated to reach at least $1.3 billion by next fiscal year.

In the past five years, almost $500 million has been cut from the Medicaid program, mostly by reducing rates to health-care providers and restricting services available to SoonerCare members. The past decade has seen about $1 billion in cuts.

The recent rate decrease comes from agency officials anticipating cuts of $64 million in the program needed by the end of June.

This reduces federal matching funds, which will total a loss of $164 million in total state and federal funding for Oklahoma Medicaid. The reduced rate goes into effect June 1.

It may get worse. Agency officials have stated another $100 million reduction may be in store for next fiscal year's budget.

The estimate about the number of nursing homes expected to shutter came from an accounting firm asked by the Oklahoma Association of Health Care Providers to determine how the cut would affect facilities with varying populations of Medicaid patients.

About 70 percent of the total nursing home population in the state utilizes Medicaid.

The current average loss on state nursing homes per Medicaid patient is about $14 a day, said executive director Rebecca Moore. With a 25 percent rate reduction, the Medicaid rate to providers becomes about 65 percent of what Medicare providers receive for health-care services. Moore has been reaching out to the association members to see how they are preparing.

"I had one member tell me, ‘I don't need an accounting firm to tell me that losing $300,000 a year means I can't keep my nursing home open.' They know," Moore said. "The continued loss in the rate is quite obviously going to lead to closures. Most are in rural-area homes."

‘Absolute panic'

Grace Living Centers, which includes 28 facilities across the state, will remain open depending on the percentage of Medicaid patients in each facility. Those with more Medicare and privately insured patients will be more likely to survive, though on a slim margin.

"If the proposed cuts go through, then it's highly unlikely many of the homes we manage would remain open," said Don Greiner, the company's president. "Our company standards exceed the minimum standards, which are federal. We won't reduce them."

Unlike many other businesses, which can have layoffs or cut programs, nursing homes cannot make those adjustments, Greiner said.

"We can't do that and wouldn't want to make those kinds of cuts," he said. "These cuts are so deep even a bankruptcy won't work. Bankruptcy puts off long-term debt, but you still have to make payroll."

Greiner, who is also a board member of the health-care providers association, said nursing homes in urban areas tend to do better because higher populations allow for a greater mix of Medicare, private pay and temporary rehabilitative patients.

"Many homes in rural Oklahoma don't have alternative revenue, so they will go into liquidation and close," Greiner said. "It's shocking. We've lost about one-fourth of nursing homes in Oklahoma in the past 12 years."

For some homes staying open, they may be hard-pressed to make any capital improvements.

Moore said there is a numbness right now, with administrators unsure how to proceed.

"Most facilities I've talked to so far are in an absolute panic," she said. "They are very scared, and the workers are scared about losing their jobs. When you shut down a nursing home in a rural area, the economic impact of that is significant. A nursing home in some places is the secondary main employer. It's pretty scary."

For the families of loved ones on Medicaid in a nursing home expected to close, options are scarce.

"They have very few, little or none," Moore said. "To qualify for Medicaid, a person has to be impoverished. They would have had to sell all their assets and have no other means to pay. They don't have homes to go back to. And they couldn't go back to a home without some form of 24-hour care. Home- and community-based care won't work for these individuals.

"We don't know where they are going, and we don't know what the state will do. If a facility cannot stay open - well, it's overwhelming right now."

‘Creative solutions'

A solution being discussed among policymakers is rolling patients off Medicaid and into Insure Oklahoma, which is a state-supported insurance for low-income, working individuals. The nursing home association backs the idea and a proposal to increase the tax on tobacco products, as long as the money stays in health care and includes nursing facilities.

The association also encourages the state to participate in a federal program called the Upper Payment Limit. It provides supplemental funding to make up the difference between Medicaid rates and the maximum federal limit for Medicare. The association states it could generate up to $275 million for rural health care. It requires that the health care authority approve a partnership between rural hospitals and nursing homes.

"I believe our lawmakers don't want to see this happen and are trying to come up with creative solutions," Greiner said. "But we've not seen any proposals. This Legislature has historically not been in favor of any tax increase. Tobacco is the least unpopular. We are 60 days away from cuts going into effect, and no hard plan has been seen. We have no alternative to prepare. With hope there will be a resolution."

If there isn't, expect a wave of closures, he said.

"We are just in shock," he said. "These buildings have been taking care of families in communities since the '60s. You think this is someone else's problem, even with 100 closing in the last 20 years. There is going to be an awakening in the profession. This is not a matter of shave a little here and shave a little there. This is literally liquidating."

This means patients will be without a medical home and workers will be laid off.

"For those of us who work with these people every day, it's sad to see politics causing this," Greiner said. "We can't provide them any certainty. There's a real cost.

"For those of us in it from the beginning, in the second and later generations, we've never faced anything like this before. We don't know how to prepare for ourselves and those we care for. We are in shock, but we are hopeful. We do not believe lawmakers have malintent. We believe they want a solution too. It's a matter of priorities."