Large assisted-living chain curtails Medicaid participation

Low reimbursements and KanCare cited as reasons

0 | KanCare, Medicaid-CHIP

Betty Spalsburg, a resident at the Vintage Park assisted living facility in Tonganoxie, enjoys a recent musical program put on by children from The Learning Center, a local child care center. Children shown, left to right, are Thatcher Page, Miley White and Sam Chelbi.

Betty Spalsburg, a resident at the Vintage Park assisted living facility in Tonganoxie, enjoys a recent musical program put on by children from The Learning Center, a local child care center. Children shown, left to right, are Thatcher Page, Miley White and Sam Chelbi.

— One of the state’s largest assisted-living chains has curtailed its participation in the Kansas Medicaid program.

“Of our 18 facilities, 15 are no longer taking any new Medicaid clients,” said Denise German, senior vice president of Vintage Park, which is headquartered here.

The decision, German said, was driven by a 2012 reduction in Medicaid reimbursements and by concerns that payments would be cut more under KanCare. The three Vintage Park facilities that still accept Medicaid clients are in towns with no other facilities. The company’s local administrators there chose to continue so there would be local options for residents.

KanCare is the name for Gov. Sam Brownback’s Medicaid makeover initiative, which involved the hiring of three managed care companies to run day-to-day operations of the state’s $3.2 billion Medicaid program. The KanCare companies are Amerigroup, UnitedHealthcare and Sunflower State Health Plan, a subsidiary of Centene.

The companies took over Jan. 1.

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Denise German, senior vice president of Vintage Park.

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Looking to cut costs

“These are for-profit companies. We know they’re going to be looking for ways to cut costs and since reimbursement is very minimal already, we’ve elected not to continue to participate in the program,” German said.

Vintage Park began changing its policy a few months after Brownback first announced his KanCare plan in November 2011. Its individual Kansas facilities began making the changes more or less at their own pace. The result has been a major reduction in the number of Medicaid residents. Before this year, German said, Vintage Park facilities in Kansas had been admitting about 100 Medicaid residents annually.

“A year ago, we probably had 250 Medicaid residents in 18 facilities,” she said. “Now, I’d say we’re down to about 120.”

The company, she said, has been doing “fine” without new Medicaid admissions.

Vintage Park won’t ask private-pay residents to leave if they deplete their life savings and end up on Medicaid, she said. But the 15 facilities no longer admit residents already on Medicaid.

Vintage Park is a for-profit company. Most of its facilities are in small and mid-size towns in the eastern third of the state. All 18 facilities passed state inspections the last two years with no deficiencies noted, which generally is taken as an indication of well-run operations.

Assisted Living

Assisted living facilities generally provide fewer, less intensive services for their residents in more home-like settings than do full-care nursing homes and are used by people who might need some assistance but don't require the frequent attention of skilled nurses. The costs of assisted living typically are less than that of nursing home care.

Not identified as a problem

It’s not clear whether other companies are following Vintage Park’s lead. State officials said they were unaware of the company’s decision and hadn’t seen evidence of a problem.

“We have not heard that assisted living facilities are declining to admit residents who are on Medicaid,” said Angela de Rocha, a spokesperson for the Kansas Department for Aging and Disability Services.

“Assisted living facilities’ refusal to accept residents who are on Medicaid has not been identified as a problem at this point,” she said. “And it is in the financial interest of the (KanCare managed care companies) to keep their members in a community setting instead of admitting them to nursing homes.”

An assisted living facility is considered a community setting.

Others in the industry said they knew too well the pressures cited by Vintage Park officials.

“Our company continues to accept Medicaid,” said Steven Hatlestad, vice president of skilled nursing operations at Americare, another for-profit chain with operations in several states that has 11 nursing homes and six assisted living facilities in Kansas. “But I do not believe that what Vintage Park is doing makes it an outlier. I’m afraid we’ve reached a point where some companies — some really good companies — just can’t afford to do Medicaid anymore.”

Ray Vernon runs Wesley Towers, a large retirement community in Hutchinson that offers in-home care, independent living, congregate living, skilled nursing care, and assisted living. It is a subsidiary of the Kansas West Conference of the United Methodist Church.

Vernon said while reimbursement rates are an issue, his facility won’t refuse to accept residents because they are on Medicaid.

“That would go against our mission,” he said. “But I have to say there’s some validity to what Vintage Park is saying because, in reality, (Medicaid) reimbursement has been flat for quite some time and healthcare inflation runs about twice what it is for the economy at large.”

Shared frustrations

Jim Klausman, chief executive at Midwest Health, a for-profit operation active in four states and with 24 nursing homes and 11 assisted living facilities in Kansas, said the company shares Vintage Park’s concerns but has a different strategy.

“We understand — and we share — some of the frustrations being expressed by Vintage Park, but we think we have a better shot at changing the system from within rather than pulling out,” he said.

Midwest Health’s nursing homes have signed contracts with all three KanCare companies, he said. But Midwest chose to sign an assisted-living contract with only one: Sunflower State Health Plan.

“We’re still taking Medicaid,” for assisted living, he said, “but you’ll need to be on Sunflower.”

The decision to only sign with one KanCare plan, Klausman said, was meant to strengthen Midwest’s bargaining position.

“We’d rather negotiate with one company than three,” he said.

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Debra Zehr, chief executive with LeadingAge Kansas.

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‘Uncertainty over reimbursement’

Debra Zehr, chief executive with LeadingAge Kansas, a trade group, keeps close tabs on the state’s nonprofit assisted living facilities.

“There’s a lot of uncertainty over reimbursement and the administrative costs that come with having to deal with three payers — the (KanCare) managed care companies — instead of one,” she said. “I don’t know of anybody who thinks they’re breaking even on Medicaid. It’s more of a community service than anything else. You do it because it’s the right thing to do.”

Zehr said she hoped in coming months the managed care companies would look for ways to “provide better reimbursement” for assisted living services.

“I’m sure they’ll be looking for ways to keep people out of nursing facilities,” she said.

KDADS Secretary Shawn Sullivan, a former nursing home administrator, said he expected that assisted living facilities would play a key role as KanCare moves toward placing more Medicaid enrollees in community settings instead of higher-cost institutional settings.

“Our data shows that (Kansas) has the sixth highest percentage of seniors in nursing homes in the country,” he said.

‘Tough call’

But with KanCare only a few weeks old, it is too soon to know if Sullivan’s expectations will be met.

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Cindy Luxem, chief executive of the Kansas Health Care Association.

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“It’s a tough call. KanCare is just getting started,” said Cindy Luxem, chief executive of the Kansas Health Care Association, a group that includes most of the state’s for-profit nursing homes and assisted-living facilities.

“I’ve not heard of a great number of assisted living facilities wanting to flee the system, but that’s not to say they won’t at some point down the road,” she said. “The problem (with KanCare) now is that providers aren’t getting paid. That’s the big concern.”

Vernon at Wesley Towers in Hutchinson said he and others in the industry are watching to see how the KanCare contractors will deliver on the governor’s promise that his initiative will save government $1 billion over five years without cutting rates to providers or services to Medicaid beneficiaries.

“All of us are curious about how that’s going to occur,” he said. “Now, you can jump to the conclusion that, no, they’re just going to cut reimbursement. But there are other ways to go about it, they may find ways to allow fewer people in the system or to deny payment for certain services. But at this point, we just don’t know. KanCare isn’t even two months old yet.”

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