KHI News Service

Report: Medicaid short in offsetting nursing home costs

By Dave Ranney | January 03, 2012

The nation’s nursing homes lose money caring for people whose stays are covered by Medicaid, according to a report by the American Health Care Association, a trade group headed by former Kansas Gov. Mark Parkinson.

The industry’s unreimbursed costs of caring for Medicaid residents were expected to exceed $6.3 billion in 2011, according to the report.

At the same time, at least 30 states either cut or froze their Medicaid rates last year.

“Cutting back during tough economic times isn’t easy, especially when state underfunding leaves care providers to pick up nearly $20 each day for those who rely on Medicaid for the nursing facility care they need,” Parkinson said in a prepared statement that accompanied the study.

The shortfall in Medicaid funding, he said, “only harms those most at-risk who require care, jeopardizing their access to nursing facility services.”

In Kansas, nursing homes were expected to lose $8.64 a day on each Medicaid resident in their care, according to the report. Facilities in other states fared considerably worse.

In nine of the 38 states cited in the report, nursing homes were expected to lose more than $25 per Medicaid resident per day.

“We’re OK,” said Cindy Luxem, executive director at the Kansas Health Care Association, an industry group. “I have to say we’re doing better than most states. But at the same time, people need to realize that we’re expected to provide services at rates that don’t cover our costs and unlike a lot of health care providers we don’t have (private) health insurance (revenues) to fall back on. There’s a little but it’s not much.”

Typically, nursing homes rely on their Medicare and private-pay billings to offset Medicaid losses.

The report noted that nursing homes in at least four states - Hawaii, Indiana, Iowa, and Oregon – were expected to lose less on their Medicaid residents than their Kansas counterparts.

Nursing homes in two states, Michigan and North Dakota, were expected to show profits of $2.29 and 24 cents per day per Medicaid resident, respectively.

In Kansas last year, nursing homes were paid, on average, about $150 a day for each Medicaid resident in their care. The services are expected to cost taxpayers almost $438 million in the fiscal year that ends June 30.

Luxem said Kansas would have fared worse in the report if it weren’t for legislators passing a bed tax in 2010 that generated millions of additional federal aid dollars for nursing homes in 2011.

“We are extremely grateful for that and for the administration not cutting Medicaid in the fiscal year we’re in now and saying we’re not going to take a cut when we go to managed care,” Luxem said, referring to Gov. Sam Brownback’s plan to let managed care companies run the state’s Medicaid services starting in 2013.

Historically, about half the state’s 28,000 nursing home residents are on Medicaid.

Kansas Department on Aging officials have said the state is too dependent on nursing home care and should do more to promote in-home services for the elderly and disabled.

“It’s kind of a dichotomy,” said Sara Arif, a department spokeswoman. “We very much see the need for nursing facilities to be adequately reimbursed, but at the same time we also see the need for home and community-based services because, generally, that’s where people want to be and its more cost effective.”

Arif said Kansas ranks fifth in the nation in its reliance on nursing home care.

She said she doubted Medicaid would ever fully cover the nursing homes’ costs.

“It’s never going to be as good as private pay,” she said.