Cuts feared from coordinated care

Rhode Island nursing home owners have become accustomed to cuts in state Medicaid reimbursements in recent years, just as they’ve gotten used to the rapid pace of change in how they and other care providers are paid for their services.
So now that the state is embarking on a long-term project to combine the management of Medicaid and Medicare dollars that go to long-term care, they are worried that the change could just be a prelude to more cuts.
“This could cause [nursing homes] to cut staff, which would mean they can’t take the same kind of attentive care of people,” said Virginia M. Burke, president and CEO of the Rhode Island Health Care Association, which represents 65 nursing homes in the state.
“Their quality of life depends on the people who provide bedside care,” she said. “If that person has time to chat and provide individualized care, the quality of life for that person is preserved. If they have too many things to do because of understaffing, it becomes more of an assembly line.”
The change nursing homes fear is the first phase of Rhode Island’s Integrated Care Initiative, which will eventually coordinate treatment of residents eligible for Medicare, the federal insurance program for seniors, along with seniors on Medicaid, the national low-income program.
Medicare pays for seniors’ direct medical expenses, but not nursing home care. The high cost of nursing home care often exhausts personal resources to the point where they qualify for Medicaid, which does pay for nursing homes, but has been straining under the burden of an aging population. The long-term care population represents 20 percent of those on Medicaid, but 70 percent of the program’s cost, according to state officials.
By managing the payments from both programs through a single manager, the state hopes to make it less confusing for recipients and make better decisions for them through sharing information.
Changes involving Medicare will require federal approval, expected no earlier than 2015, so the state is taking the intermediate step of changing how Medicaid funds for long-term care are spent first before adding in Medicare.
For years the R.I. Executive Office of Health and Human Services has been trying to minimize the number of Medicaid recipients who receive long-term nursing care, both to reduce costs and improve their quality of life. This effort includes the Home Transition Program, made up of nurses and social workers visiting nursing home residents to see if any could move back to their community. But the results have been modest at best, so in the Integrated Care Initiative the state decided to turn over the job of managing those cases and the money paying for them to a Health Maintenance Organization. It ultimately chose Neighborhood Health Plan of Rhode Island in a competitive bid process.
Instead of billing the state for services provided to residents on Medicaid, nursing homes will now bill Neighborhood, which will receive per-patient administrative fees for their work.
While nursing homes support the integration of Medicare and Medicaid, without the Medicare piece, Burke said it’s unclear what benefit adding a middle man will provide for patients. Burke estimates that Neighborhood will collect $27 million in fees annually for nursing care and $14 million for other services.
The General Assembly authorized the changes in the state budget, but did not include any new spending to pay Neighborhood.
To make up the administrative costs, the state expects Neighborhood will reduce the number of Medicaid recipients by 6 percent, reducing the size of the bill going to nursing homes each year.
“Absent inclusion of the Medicare benefit, there is no opportunity for ‘integration’ of care, and no benefit to our residents of turning them over to a [Health Management Organization], even an outstanding HMO like [Neighborhood],” Burke wrote in a report on the issue. “Nursing facilities are already financially fragile, and sustained a $7 million cut in funding this year. We know through experience that this expenditure will be made up through funding cuts in other areas.”
As evidence the change will come with a cost, Burke said the state’s Revenue Estimating Conference has projected a 0.75 percent increase in Medicaid nursing home days billed for the next year.
The Health Care Association has asked that nursing homes be excluded from Phase 1 of the Integrated Care Initiative.
So how does the state expect Neighborhood to reduce the number of sick, elderly people in nursing homes enough to justify their overhead?
According to the R.I. Executive Office of Health and Human Services, managing the low-income senior population is a labor-intensive job the state just doesn’t have the resources to do as well as Neighborhood. And while Neighborhood will be working to move those nursing home residents who can live in the community back home, a bigger part of their effort will be to prevent seniors not currently in nursing homes from ending up there, said Health and Human Services Director of Policy and Innovation Elena Nicolella.
“We have contracted with Neighborhood to make sure transition from hospital to nursing is smooth, the transition from nursing to home is smooth, so services get to them and they can remain in the community longer,” Nicolella said.
The concerns of nursing homes and the complicated rollout of the Initiative (which home health care providers as well as nursing home owners have said was not explained to patients) is another reason state officials say starting with Medicaid before transitioning to Medicare was necessary.
Dr. Paco Trilla, chief medical officer at Neighborhood Health Plan of Rhode Island, said the key to his organization’s management of the Medicaid population would be preventative care to keep people healthy enough to stay out of nursing homes.
“We are setting the stage to use data and analytics to bring more resources to bear in case management to support patients’ primary interest, which is to stay in their homes,” Trilla said.
Health and Human Services Secretary Steven M. Costantino said that despite the complaints, 67 out of 85 nursing homes in the state have signed contracts with Neighborhood.
The state has made joining the new system the default option for Medicaid beneficiaries and sent two waves of letters to them this fall giving them the option of opting out.
According to Costantino, 755 of the 8,596 Medicaid recipients who have received letters, or 8.8 percent, have opted out of getting managed care from Neighborhood.
Kathleen Heren, executive director of the Alliance for Better Long Term Care, who acts as an ombudsman for the state on long-term-care issues, said the kind of systemic changes being worked through by the state and country are bound to result in some challenges, but the Initiative should be given a shot.
“It is a brand-new thing and people don’t like change,” Heren said. “It is here and we have to deal with it. Eventually when it gets off the ground it is going to be a good thing for patients.” •

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