Health exec discusses Medicaid reimbursement
Hugh Hall
Age: 54
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Position: President, Rhode Island Health Care Association
Background: Hall has been a nursing home administrator for more than
20 years. He became administrator at West View Health Care in West Warwick earlier
this year, following a number of years as administrator for Cherry Hill Manor
nursing home in Johnston.
Education: Master’s degree in speech pathology, University of Rhode
Island
Residence: North Kingstown
Rhode Island Health Care Association (RIHCA) is a nonprofit organization that represents about 65, mostly for-profit nursing homes in the state. Combined, its members care for more than 7,000 people.
Earlier this year, the General Assembly passed legislation that revamps the
formula that the state uses to reimburse nursing homes under the Medicaid program,
which accounts for roughly 75 percent of a typical nursing home’s revenue. The
change in the “principles of reimbursement” is intended to more closely reflect
the actual costs that nursing homes incur in providing care to Medicaid patients.
It is expected to provide an additional $30 million in state and federal Medicaid
funding to Rhode Island nursing homes over the next three years.
Q. RIHCA for years has been lobbying the state to change the formula it uses to determine Medicaid reimbursement. This year it was successful?
A. Yes, we were thrilled, in a difficult economic situation, to finally
get our message across. The association has been working on this for a number
of years. We got the Legislature and the Department of Human Services to bring
in an outside expert, Joe Lubarsky of BDO Sideman (a national consulting firm),
who helped the state and the stakeholders – the nursing home professionals,
associations, advocates for the elderly – get together to analyze the strengths
and weaknesses of the current system. I think since the inception of the principles
of reimbursement, (the state) has recognized that they were under-funding nursing
home care, and their expectation was that other payer sources – Medicare, private
payers and other insurance – would make up for that difference. What’s happened
is that the private-pay market has shrunk, Medicare has cut its funding and
so has managed care. So where the nursing home profession was able to compensate,
they can’t any longer. The principles have not been adjusted properly since
1991.
Q. Nursing home administrators have complained that the state reimburses costs over a three-year period. So if the cost of, say, health insurance spikes one year, operators must wait three years to get reimbursement for those costs. Did the legislation fix that problem?
A. If I were to summarize this legislation, I think we probably could
categorize it as landmark, in the scheme of nursing homes since the inception
of Medicaid, because it puts in place an annual re-basing. While there was a
re-basing every three years, now it’s annual. So instead of having to wait maybe
up to four years to get your costs recognized, that shrinks down to maybe 17
months, as cost reports are processed and they adjust those rates going forward.
That’s huge for us. Does it solve all our problems? No, but we’re worlds ahead
of where we were. We still have a lot of work to do and we’re hoping that the
Department of Human Services and the governor’s office will, as time goes on,
continue to look at the principles and make them more responsive.
Q. What else does the legislation do?
A. The first phase will be largely funded by an increase in the state’s provider assessment, from a 3.75 percent assessment on revenue to 6 percent. That will introduce an adjustment to the labor rates from 1991 up to 2002 levels, establishing a new median. The cap on the labor-cost center, which is basically created through all of the cost reports, will be new, bringing the old formula up to current day standards. And it allows some of the facilities that are well below the median to apply for a bit of catch up, for funds that would bring them from where they are and increase them up to 25 percent of the difference between where they are and the median. It will allow facilities additional funds in the labor-cost center, which is a great thing.
Q. In essence, the industry will be getting about $20 million in additional Medicaid reimbursement next year. Where will that money go?
A. Well, in phase one, you could suggest very clearly that the money
is going to the work force. The money that is generated through this provider
assessment is going to go to the labor cost center, which will adjust wages
of health care workers.
Q. Have wages improved for certified nurse assistants (CNAs)?
A. They’ve gotten better, but it’s still a problem. We were fortunate
several years ago to make the Legislature and the governor’s office aware of
the crisis that existed in staffing. At that time it was focused on CNAs. I
think state and federal funding brought about $8-$9 million to the table, and
that money was passed directly to the CNAs. So that elevated the wages anywhere
from $1 to $1.50 an hour. We have seen more folks going into CNA programs and
coming out and getting jobs. When we were at the peak of crisis, we were running
somewhere around a 26 percent vacancy rate for CNAs, according to an unscientific
survey of our membership. The last time we did a study, about 10 months ago,
it showed about a 13 or 14 percent vacancy rate. That’s still a concern, but
it’s a dramatic drop. What’s happened that’s very alarming to us is that the
licensed-nurse vacancy rate has gone from about 13 percent to now we’re running
at about a 25 percent vacancy rate for RNs and LPNs. We’re really in a crisis
with that right now.
Q. In 2002 the state Health Department released “quality report cards” for almost all of the state’s nursing homes. What effect has that quality initiative had on nursing home operators?
A. I don’t think the release of those has had much of an effect on
operators honestly, because all the operators have been committed to and working
on quality for a number of years. We’ve been very forthcoming in participating
in quality studies, going back as long as 10 years ago with Brown University.
We’ve had a number of studies done by Rhode Island Quality Partners, whether
it’s related to falls or pressure ulcers or pain in long-term-care settings.
And we’ve been very aggressive in participating in those, because when resources
like RIQP or Brown are presented to providers, we’re very eager to participate.
Q. How many of the 100 or so nursing homes in the state are currently in bankruptcy proceedings or recently emerged from bankruptcy?
A. I think we’re talking about 10 to 12 in the last few years. There
are still a couple in (bankruptcy), and there are a couple more that have just
come out. So that continues to be a problem.
Q. With the influx of baby boomers in coming years, are operators already thinking about where they’re going to get capital to expand facilities or build new ones?
A. I think there might be some providers in Rhode Island who are thinking
that far out. But honestly, if I were to look at all 100 homes in the state,
I think a lot of them are really in survival mode. I think there’s been a real
press on census in Rhode Island. We’ve seen census drop over the last five years.
Some of that is good news for the patient or the resident, because there are
some other alternatives. Home care and assisted living have provided alternatives
to long-term care in a nursing facility setting. But we also have some concerns
that the resident receives the proper care in the proper setting.
Q. The assisted-living industry has quadrupled in Rhode Island over the past decade, to around 3,300 beds. What effect has that had on nursing homes?
A. I think the impact of assisted living has really been the direct
effect on our diminished census numbers over the last five years. As more and
more assisted living facilities have come into existence, some of those residents
would not have come to a nursing home, but some of them would have. So we can
assume that maybe 40 or 50 percent of assisted-living residents might have had
to leave their home and come to a nursing home because they just couldn’t be
cared for. I think what concerns the nursing facility profession is that we’re
governed and licensed and regulated by the same authority that governs and licenses
assisted living. And we don’t think that the they have the resources – I’m speaking
of the Health Department – to really do an effective job in monitoring and managing
that regulatory process.
Q. So the state has not done enough to toe the line when it comes to assisted-living centers keeping patients too long?
A. I think there’s a moving line for that resident. And I think if they were at home, it wouldn’t be an issue. But an assisted-living facility is not home. They may think it’s home, but it’s a regulated facility by the state of Rhode Island. And we feel, I think, that if they can function in there without it being a nursing facility, then we’re happy for them. We want them to be in the least-restrictive environment. But at the same time, if they require the services of a nursing facility setting, then they should be moved to a nursing facility setting. I don’t think that’s a popular position. If you talk to the general person on the street, they probably would say that ‘Well, people should live where they want to live.’ I think we have concerns that some people aren’t adequately cared for and aren’t as safe (in assisted-living centers) as they need to be. But the nursing home profession continues to be ready to take those folks and give them great care.
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