Nursing homes being forced to test employees twice a week. But who pays?

May 21--ALBANY -- The administration of Gov. Andrew M. Cuomo wants to force health insurance companies to pay for nursing homes to administer twice-weekly tests to all employees, according to memos his state agencies have sent to health facility operators.

The mandated statewide tests, coming after the high number of Covid-related deaths at state-regulated nursing homes across the state, are estimated to cost more than $40 million per week.

"Providers cannot afford to bear the costs associated with this mandate," said Stephen Hanse, chief executive officer of the New York State Health Facilities Association, which represents more than 400 nursing home and assisted living communities serving 65,000 New Yorkers.

The nursing home trade group says it supports Cuomo's testing mandate, but that it is unable to fund the tests. They said they would cost $200 per week for every worker in a state in an industry that has more than 205,000 employees at nursing homes and assisted living facilities.

The issue is far from settled, however. Health insurance and some union-funded health plans do not believe they should be on the hook for the costs associated with surveillance Covid testing of workers who do not have any symptoms of the virus. They, instead, are urging the Cuomo administration to tap a federal pot of funding they say is already available to the state. And it's unclear whether the Cuomo administration's move on the insurance coverage issue is binding upon insurance companies.

All of this comes as the state is moving forward with plans for another round of across-the-board cuts in Mediciad reimbursement rates to thousands of entities that provide Medicaid services for elderly, low-income and disabled New Yorkers.

The state previously announced a 1.5% cut in the reimbursement rates; 1% was implemented in December and the remaining .5% is due to kick in June 15. Many providers, however, were hoping that the Cuomo administration would not proceed with the next round of cuts because of the revenue losses and rising expenses many providers have witnessed with the Covid pandemic.

The Cuomo administration sent a memo to the health care industry two days ago making clear that the next round of cuts is coming in a few weeks. The cuts will affect what the state pays for -- everything from inpatient hospital services to nursing home costs to pharmaceutical expenses. The nursing home industry says it is facing $105 million in cuts under the initiative.

The state, which had to close an operating shortfall even before the appearance of Covid, has seen the pandemic drive tax and other revenues sharply down amid the state's crumbling economy.

Freeman Klopott, a spokesman for Cuomo's budget division, said the savings were proposed by a panel picked last year to come up with ways to reduce Medicaid costs.

"Meanwhile, the state is facing a 14% drop in revenue due entirely to the pandemic and in the absence of federal funding to offset this loss, we are preparing a plan to reduce spending by over $10 billion. Any category where we do not reduce funding will simply mean deeper cuts in another," he said Thursday.

The nursing home testing mandate by Cuomo comes after he has faced mounting criticism over a decision in March to require nursing homes to admit patients who were Covid-positive. Democrats and Republicans have called for a range of investigations into the matter.

Cuomo acknowledged the testing requirements on nursing homes will be a burden but that they are necessary to protect the public health. Behind the scenes, however, his administration has been pushed by nursing home operators to get the state to take some action so that the costs of the testing are nor borne by health facilities.

On May 19, the state Health Department distributed a memo to the industry stating that the tests are needed to prevent the virus' spread among patients and to ensure timely treatment of any staff who might have Covid. As such, the state declared the tests to be "medically necessary."

The nursing home industry says those two words track a federal Covid law that, in turn, then allows such tests to be covered as a health insurance benefit. Officials say the tests cost about $100 apiece, with most of the expense coming from the labs that process the specimens.

Hanse, the nursing home trade group executive, said the move by the health department -- and a similar guidance by the Department of Financial Services -- is good for nursing homes already struggling with high Covid costs. However, he said the federal government could also reject the state's position. "Then, that presents a problem," he said.

At the same time Cuomo's health department wrote nursing home operators on Tuesday, his Department of Financial Services issued what it calls a "circular letter" to all insurers it regulates; it directed insurers to provide coverage "for COVID-19 testing for twice weekly testing of nursing home and adult care facility personnel." Just how binding memos from the two state agencies are on the insurance industry is uncertain.

The state's health insurance industry is not keen on the nursing home test costs being passed onto them, which ultimately would hit consumers in the form of higher premiums.

"We recognize that testing for coronavirus infection and exposure is vital to protect and ensure the safety of the state's most vulnerable residents and the nursing home workers who care for them," said Eric Linzer, president and CEO of the New York Health Plan Association, whose members are managed care plans and prepaid health service plan insurers and all the major health insurance companies in Western New York.

"Since the beginning of the public health crisis, health plans have been covering testing for individuals exhibiting symptoms or who have had direct exposure to someone with the virus, as directed by CDC guidelines," he added.

But regarding twice-weekly testing of nursing home workers or broad public testing of New Yorkers without symptoms, such costs "should be a public health responsibility that should be paid for using available federal funding," the health insurance executive said.

The Cuomo administration has not responded yet to questions about the testing costs and the motivation behind the May 19 memo to the nursing home industry.

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