Monday, November 20, 2006
Nursing home officials say Medicaid's new reimbursement system is inadequate.
By WILLIAM K. ALCORN
VINDICATOR STAFF WRITER
Nursing home owners and administrators here and across the state are scrambling to figure out how they are going to survive financially and still provide quality care under the state's new Medicaid reimbursement system.
Before July 1, when the new system went into effect, Medicaid reimbursements for nursing home were based on the cost of care of patients.
With the new system, the state changed from "cost-based" reimbursements to a "price" system, under which nursing homes receive a fixed amount -- an average of 162 per day per patient -- even if the cost of care is higher than that.
The reimbursement can be higher or lower than the 162 average, depending on the business model and the level of illness of the people the nursing home is serving, said Harry Saxe, head of the Ohio Medicaid program's long-term care bureau.
However, that is not enough, said John Alfano, president and chief executive officer of AOPHA, the Association of Ohio Philanthropic Homes, Housing and Services for the Aging.
AOPHA is a lobbying group that represents 325 nonprofit retirement communities, nursing homes, senior housing sites and home- and community-based service providers in Ohio.
Low-income coverage
Medicaid is a federal/state program administered by the state that provides health and long-term care coverage to low-income citizens. The federal share of the program ranges from 50 percent to 80 percent of Medicaid expenditures and averaged 56.5 percent in 1998.
One of the major problems with the new Medicaid reimbursement system is that it does not financially reward providers for quality of services. The "price" system is aimed primarily at lowering bottom-line costs, not at improving quality of care, Alfano said.
He said the price system has two results that he thinks can be detrimental to nursing home patients and nonprofit nursing homes.
First, the fixed cost reimbursement system encourages and rewards cutting staff, Alfano said. AOPHA thinks higher staffing levels result in better care and more services that patients want, such as planned activities and private rooms. Also, he said, a larger staff translates into better compliance with state regulations.
Also, the price reimbursement system discriminates against nonprofits because it does not include adequate financial incentives for higher staffing levels and services, Alfano said recently in a meeting with The Vindicator editorial board.
On average, Alfano said, nonprofit nursing homes have a higher ratio of nurse aides to patients than do for-profit nursing homes.
A different view
However, Felix Savon, owner and administrator of Sateri/Ron Joy nursing home on Boardman-Canfield Road, a for-profit organization, doesn't think he has an advantage.
"We should be considered nonprofit, because you sure don't make any money," Savon said.
"With so many nursing home facilities out there any more, and a lot of assisted living facilities and home care, the patient census is down," he said.
"But, even if all 87 of our beds were full, we wouldn't make a profit because of low reimbursements from Medicaid and Medicare," Savon said.
"Another big problem with Medicaid is that it keeps changing its reimbursement process, so that just getting paid requires additional staff. We have nurses doing so much required paperwork that it takes away from direct care," Savon said.
"For-profits have the same problems as nonprofits, maybe more, because we have to pay taxes. An advantage over nonprofits ... I don't know where it's at," he said.
"If I didn't have another company, a medical supply business, to subsidize the nursing home, it would be very difficult. Our problems have been going on for 18 to 24 months, and the government has no mercy," Savon said.
Savon said he could not "in good conscience" cut the staff and services to clients. "That's why I'm taking a beating," he said.
Can't make more cuts
Also not comfortable in making more staffing cuts is Richard J. Limongi, associate director of Shepherd of the Valley/Lutheran Retirement Services' Boardman, a nonprofit organization.
"We have trimmed the fat to the point where any more cuts would affect direct care staff," Limongi said.
There needs to be some increases in Medicaid funding ... or the quality will not be there, Limongi said.
AOPHA has suggested alternatives to the new funding system, among them that more dollars be allocated to incentives to provide improved care, Alfano said.
However, Saxe said the price reimbursement system doesn't favor one group over another. There is not a significant difference in the level of illness of the people nonprofits serve compared with for-profits, yet the care delivered by the nonprofits averages about 30 a day per person more. There is not much empirical evidence that they provide 30 better, he said.
There is a quality component to the price-based system, Saxe said. In addition to the general rate, there is a quality add-on, which matches a facility's performance against the state standards.
Will need adjustments
The new system is an attempt to establish a level playing field across the board. It's a brand new system, a work in progress, and will require adjustments, Saxe said.
The price-based Medicaid reimbursement system is an attempt to constrain the growth of costs by forcing a look at less expensive alternatives, such as assisted living and home health care, Saxe said.
"If you constrain the price, then you can spread the money over more people. Not everybody needs an institutional setting," he said.
Another major issue raised by Limongi is peer grouping by the state, which recently placed the Mahoning Valley in a rural category, resulting in a lower reimbursement level.
Saxe said peer grouping is a way of grouping like facilities in size and geographic location.
"We are required to review peer groupings at every federal census. The industry does not like the designation, but has not been able to refute it," Saxe said.
alcorn@vindy.com