Nursing Homes Fight To Stay Afloat With Low Medicaid Rates

Mar. 1--The five skilled nursing facilities in Skagit County are among those struggling to survive as the state's Medicaid reimbursements fail to keep up with the rising costs of doing business.

"It's impossible for us to stay afloat at the current funding," said Serge Newberry, owner of Mira Vista Care Center in Mount Vernon. "We've tried as much as we can to cut costs, but just like every other nursing home provider, we're screaming for more reimbursement."

Newberry said about two-thirds of his facility's patients are on Medicaid, which is the shared state-federal health care program for low-income individuals.

"If we were to take 100% Medicaid, we would go out of business," he said.

Low Medicaid reimbursement rates have played a role in the closings of 20 nursing homes in the state in the past three years, said Robin Dale, president/CEO of the Washington Health Care Association, which represents the state's nursing home industry.

In July, San Juan Assisted Living in Anacortes reported it was in danger of closing -- which would have displaced 46 residents -- due to inadequate Medicaid reimbursements. The facility was able to remain open after the state increased its reimbursement rates.

State legislators have proposed new funding this year to address the problem. Both Democrats and Republicans from legislative districts that include parts of Skagit County have said they support more Medicaid funds for skilled nursing facilities.

Dale said the additional funds may help prevent more closures in the short term. But he said a long-term fix is needed to ensure Medicaid payments keep up with cost of providing care.

Hardship on businesses, employees

Newberry said it costs the facility $271 a day to care for a patient, while the state reimburses the facility $221 for each Medicaid patient.

Daily Medicaid reimbursement rates are calculated based on each facility's 2016 reported costs.

Newberry said that's a problem for nursing homes that have had to comply with mandatory minimum wage increases and higher expectations for care.

"If I have a restaurant and my costs go up, I could turn around and raise prices," he said. "My costs continue to go up, but Medicaid (reimbursement rates) don't."

Skilled nursing facilities rely on patients with private insurance or Medicare to stay afloat. Medicare pays more per patient per day, but only covers short-term stays at nursing homes following hospitalizations.

At Prestige Care in Burlington, Administrator Suzanna Weiler said low rates sometimes mean the facility has to turn away Medicaid patients.

"I probably have 25 on my waiting list," she said.

The narrow operating margins have also hurt employees, who have seen their benefits cut, Weiler said.

She said it's unfair the facility is unable to offer better compensation than a fast food restaurant.

"To be a (certified nursing assistant), you have to go to school and it's a lot harder work," she said. "You're doing a lot harder physical work and emotional work."

Mike Shaw, executive director of Life Care Center in Mount Vernon, said finding job candidates is all the more challenging because hospitals can offer higher wages for the same job.

"They won't come here to be a support for residents if we can't give them a living wage and if they have a family to take care of," he said.

In danger of closing

The state Department of Social and Health Services (DSHS) estimates the shortfall between facilities' reported costs and Medicaid rates paid in 2018 was about $116 million, department spokesperson Chris Wright said in an email.

If there are no changes to Medicaid rates, the department expects that in 2020 the shortfall will be close to $130 million, he said.

Dale said the state's average Medicaid reimbursement rate is about $220 a day -- lower than in Idaho (about $260) and in Oregon ($320).

"If you're losing between $35 and $45 a day for every Medicaid resident, that is going to impact your ability to stay open," he said.

Another nursing home -- Delta Rehabilitation Center in Snohomish County -- announced earlier this month it will close.

When a nursing home closes, DSHS is required to find new homes for the Medicaid residents, Wright said. He said the department works with each individual to move them to another skilled nursing facility, an assisted living facility, adult family home or private residence.

Dale said residents can suffer "transfer trauma" when they move to a new facility.

"For an acutely ill resident with even a moderate degree of dementia the move can have a significant negative impact, particularly if family is unable to visit as regularly as before," Dale said in an email.

New funding

Skilled nursing facilities may get some relief this year.

The state Senate's proposed budget calls for about $43 million to be used to raise Medicaid reimbursement rates, Wright said. The budget of the state House of Representatives proposes less -- about $34 million -- he said. Both budgets propose a one-time inflation adjustment to bring reimbursement rates up to the cost of care.

"It's a nonpartisan (issue)," said state Sen. Keith Wagoner, R-Sedro-Woolley. "The House and Senate both want to put more into this. It's a matter which number gets agreed on or if there's a compromise. It will be in the next couple of weeks."

He said the state will need to put more resources into skilled nursing facilities as the population gets older.

"I wish we got to this before 21 (facilities) closed," Wagoner said.

State Sen. Liz Lovelett, D-Anacortes, agreed that Medicaid reimbursement rates are too low, and worries about the impact on nursing home staff.

"It's making sure staff are adequately compensated and (there isn't) a high level of burnout of employees," she said.

Dale said while temporary relief is welcome, a longer-term solution -- such as adjusting rates annually instead of biennially, and an annual inflation adjustment -- is needed to fully compensate facilities for cost of care.

Both budgets would still leave a shortfall between costs and Medicaid rates of between $106 million and $116 million, Wright said.

Dale said another concern is that the scheduled rate increase on July 1 will be too late for a few facilities that are barely making it.

The Washington Health Care Association asked legislators to move up the rate increase to May 1. Dale said that would address the jump in costs that occurred in the first half of the year, such as the $1.50 minimum wage increase.

"(Two facilities) are in danger of having to close between now and July 1," he said.

A growing need

DSHS estimates that by 2040, the number of those over the age of 65 will reach 1.8 million and represent one-fifth of the population.

"With a rapidly aging population, there will be a need for more providers of all kinds over the next decade," Wright said in an email.

Dale said the 21 closures come at a time when the state needs more skilled nursing facilities, not less.

"There is going to be a capacity issue in five to 10 years," he said. "Even if (some) people go to home care and assisted living ...These (skilled nursing facilities) closures are going to be a problem for us in a decade."

-- Reporter Jacqueline Allison: [email protected], 360-416-2145, Twitter: @Jacqueline_SVH

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