Nursing homes asking states to boost Medicaid rates to cover cost-of-care shortfalls

Editor's note: This story is part of Care in Crisis, an investigative series that observes the current state of the nursing home system in the West. The project focuses on four states that have struggled more than most with staffing shortages, high turnover rates and other obstacles: Montana, Oklahoma, Texas and Nebraska.

Medicaid is a state-federal partnership that brings health insurance to low-income Americans and covers many long-term care services. Each state invests money into its own Medicaid program. The feds provide matching funds, generally offering higher rate matches to poorer states.

Medicaid is the primary payer in long-term care. Medicare covers short-term rehabilitation in nursing homes but not long-term care.

Researchers say most of the nursing home sector agrees reimbursement rates are significantly lower than costs of care — especially given government requirements for quality and compliance in nursing homes.

Lee Enterprises' Public Service Journalism team looked at four states in its west region — Montana, Oklahoma, Texas and Nebraska — in which nursing homes are asking for more Medicaid funding and rank poorly in certain metrics nationally, such as federal quality ratings, staff shortages or turnover rates.

The sector is asking urgently in some states for their governments to boost Medicaid reimbursement rates to close widening cost gaps and pay competitive wages to provide quality care as baby boomers are set to inundate nursing homes.

Montana

Montana has the highest nursing staff turnover rate in the nation at 63.6% and ranks 35th in federal quality ratings at 2.88 on a five-point scale.

Two sector leaders characterized Montana's nursing home base Medicaid rate of $207 per resident per day as laughable in a Department of Public Health and Human Services public hearing in July.

In November, a state-funded study recommended a base rate $70 higher than currently — or an additional $54.2 million yearly combined from the state and feds.

But DPHHS then proposed covering 58% of the funding gap in the next fiscal year and 36% in the second year of the biennium budget offered by GOP Gov. Greg Gianforte.

In a legislative budget hearing, DPHHS Director Charles Brereton said the state wants to stabilize nursing homes and doesn't want to risk "overfunding certain providers," describing the proposal as "reasonable and appropriate and fiscally sound."

Democratic Sen. Mary McNally said she wouldn't expect the Legislature to agree to fund at 100% but proposing only 36% in the budget's second year is a "stunning" way to not measure up to the study.

Oklahoma

Oklahoma has the nation's second-highest nursing staff turnover rate at 61.4% and ranks 44th in average federal quality ratings at 2.65 on a five-point scale.

Steve Buck, president and CEO of Care Providers Oklahoma, said financial analysis suggests the state's Medicaid reimbursement rate will be about $43.50 per resident per day short of covering cost of care after a temporary COVID-19 supplemental payment of $35 to $38 expires.

Care Providers Oklahoma is asking the state to find an approach that binds the Medicaid reimbursement rate to audited cost reports — an estimated additional $58-63.8 million investment annually from the state.

But the state's health care authority prefers more of a performance- or outcome-based model because it says cost of care varies widely and isn't always an indicator of quality.

Texas

Texas has the fifth highest nursing staff turnover rate in the nation at 59.5% and ranks 48th in average federal quality ratings at 2.55 on a five-point scale.

Texas Health Care Association is asking its state Legislature to appropriate an additional $450 million yearly in general fund revenue toward the Medicaid base rate — an increase of $38 per resident per day.

THCA President and CEO Kevin Warren said the only Medicaid daily rate increases since 2010 were in fiscal years 2014 and 2015.

Warren said that even with THCA's request the Medicaid rate would only be at 84% of the funding methodology established by the Legislature. If no action is taken, Warren said the gap will become about $80 after a COVID-19 supplemental payment of $19.63 ends.

Republican Sen. Charles Perry, vice-chair of the Health and Human Services Committee, in an August hearing suggested temporary action but cautioned against any permanent moves because he feels private sector competitor wages will come down "if we can just ride this out for a year or two."

Nebraska

Nebraska has the 22nd highest nursing staff turnover rate in the nation at 55.3% and ranks 16th highest in average federal quality ratings at 3.08 on a five-point scale.

The Legislature raised the Medicaid rate for its nursing homes by an average of about $25 per resident per day this year to replace a pandemic supplemental of $20, according to the Nebraska Health Care Association.

While grateful for the increase, NHCA said about half of the Medicaid gap remains unaddressed. A study commissioned by NHCA found that annual appropriations would need to be boosted by $60 million to fill the remaining hole.

ABOUT THIS SERIES:The COVID-19 pandemic worsened nursing home staff shortages – causing capacity limits and closures – and exposed systemic shortcomings.Lee Enterprises west region Public Service Journalism team examined the "Care Crisis" and its implications. The team explored the nursing home sectors in Montana, Nebraska, Oklahoma and Texas. Each state ranks poorly in federal quality ratings, staff shortages or turnover rates.Nursing communities and advocates in those states are urging lawmakers to help improve care for America's growing health-assisted population by boosting Medicaid reimbursement rates and paying competitive wages to close historic cost gaps.Reconvening state legislators armed with committee hearings testimony and data could start reshaping the future of nursing homes in 2023.