KHI News Service

Nursing homes feel KanCare and other pressures

Slow payments, more paperwork and mounting other problems

By Mike Shields | November 25, 2013

Kevin Unrein, chief executive and co-owner of a company that operates three Kansas nursing homes, said there is something he would like state policymakers to know about KanCare.

“It’s a mess,” he said last week, leaving a meeting at a Topeka hotel conference room that brought together dozens of nursing home managers and representatives of the state’s three KanCare managed care companies. “I think it’s like Obamacare. It wasn’t ready and they pushed it and made it work.

“Most of our problems with it tend to be billing issues, not getting them resolved. It’s all these little things that need to get fixed and they never get fixed,” he said. “Things like paying the wrong rates. That’s very common. We used to bill (the state-run Medicaid program) on Thursday or Friday every week and payment hit the bank the following Friday. Now, about 20 percent gets paid by the following week.”

Unrein said his company is owed an estimated $500,000 overdue from the KanCare insurance companies for services provided at Lakepoint Corporate’s three facilities, which are in El Dorado, Augusta and Wichita. Together, they house about 270 residents. More than half those frail, elderly people are enrolled in KanCare plans paid for by state Medicaid dollars.

“What Medicaid used to take one hour a week to do (in nursing home staff time), it now takes 40 hours,” Unrein said. “It’s basically doubled our billing costs. In the nursing home area, it ought to be pretty basic. Most of the people are going to be with us until they die. There’s not a lot of negotiating on hours and rates. It’s routine billing”

Pam Goodman, a nurse at Country Care in Easton, prepares a resident's medications.

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Months of glitches

Unrein’s complaints about stalled or contested payments and added administrative burden are nothing state and KanCare company officials haven’t heard before from the state’s Medicaid providers.

Hospitals, doctors and pharmacists have all raised the same or similar concerns in recent weeks and months. Members of the Legislature’s KanCare oversight committee got earfuls at their first meeting in October and likely will hear more at their meeting scheduled today.

For months, the glitches have been chalked up by many as the inevitable consequences of sweeping system changes launched by the administration of Gov. Sam Brownback when it undertook to remake the state’s Medicaid program by turning over day-to-day operations to the for-profit companies: Amerigroup, UnitedHealthCare and Sunflower State Health Plan, a subsidiary of Centene.

Director of Nursing Tori Mance with a resident at Country Care in Easton.

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Administration officials said KanCare would save state and federal governments more than $1 billion over five years while improving the health of Medicaid enrollees and without cutting rates paid to service providers.

With more than four years left to go, that remains to be seen.

But top administration officials continue to paint the program in glowing terms, despite the concerns raised by frustrated provider groups.

Last week, Lt. Gov. Jeff Colyer described KanCare as: “…leveraging private sector experience and innovation while maintaining policy and hands-on oversight of the Kansas Medicaid program to ensure improved patient outcomes and a sustained growth rate.”

‘Raising hell’

Meanwhile, the clamor over the problems seems undiminished or even growing, at least among some providers.

“We didn’t really start raising hell until June, July and August,” Unrein said of complaints his company began making then to the KanCare companies. “We thought this would all be figured out by now.”

Unrein said now he is ready to start complaining to state lawmakers or anyone else who will listen about the ongoing problems he and others in the state’s long-term care industry have been experiencing with KanCare, which was launched Jan. 1.

Ardy Vanderpool talks with Country Care co-owner Tammy O'Donnell.

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“We’re going to be talking to everyone we can,” he said.

Aquila Jordan of the Kansas Department for Aging and Disability Services told the nursing home managers at last week’s meeting that agency teams fielding questions and concerns about the program “don’t have the physical capacity to take phone calls that they need. The volume they receive is overwhelming.”

Spokespersons for the state’s long-term care industry said the larger nursing chains have the resources — attorneys, full-time billing staff and enough operating cash — that leave them better equipped to weather the changes, but smaller, independently owned nursing homes, which serve many of the state’s rural towns, have been particularly hard hit.

“It’s just a big old rock, a boulder running down the hill at them,” said Cindy Luxem, president of the Kansas Health Care Association, which represents most of the state’s for-profit independent nursing homes and assisted living facilities. “I’ve now got these out-of-state real estate companies calling, asking us to let them know when people are ready to sell. This administration is turning this into a big-company business.”

Tammy O'Donnell talks with one of the 45 residents at Country Care, a nursing home that she co-owns in the northeast Kansas town of Easton.

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‘The insurance company game’

Easton, which is near Leavenworth, has a population of 253 and 45 of the town’s residents live at Country Care, the local nursing home. Forty of the 45 residents are in KanCare plans, according to Tammy O’Donnell, who co-owns the nursing home with her elderly mother, Marthy Hegarty. It has been the family’s business since the 1970s.

“It’s like the insurance company game,” O’Donnell said of dealing with the KanCare companies. “You’ve seen movies made about stuff like this. They deny claims or take long enough to pay that eventually you just give up and go away.”

O’Donnell said the nursing home recently filed a claim for 31 days of services it provided a resident, expecting it would be paid the standard, flat day rate of $140 x 31 or $4,340. But apparently a field in the online billing system was incorrectly filled so the KanCare company read it as a bill for $31, which it paid. When the error was pointed out, the KanCare company officials acknowledged it but said their contract with the nursing home only obliged them to pay what was billed.

“We argued and argued with them,” O’Donnell said. “Finally, it escalated to a point where I said we were turning them into the state for Medicaid fraud. The state of Kansas was paying them their amount, but they wouldn’t pay us. Finally, that got their attention. Basically it took weeks and weeks of talking to people. They still haven’t paid it, I don’t believe, but now at least they talk to us about paying. That’s just been one example. There have been many, many others like that.”

A representative of one of the state’s larger long-term care companies said the KanCare changes had not been as difficult for them but had not gone unnoticed, either.

Downtown Easton, the small town in northeast Kansas where Country Care is located. Easton is 14 miles west of Leavenworth and 53 miles northeast of Topeka.

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“Payment has slowed down. And we’ve seen the growing pains you would see with a new system moving forward,” said Lee Eaton, vice president of operations for Midwest Health, which has 48 facilities in four states, about half of which are in Kansas. “We haven’t had cash flow problems, but I can see how a mom-and-pop would be really stressed to make payroll.”

Even before KanCare, according to those in the long-term care industry, Medicaid failed to cover the actual costs of service, which have to be made up in a variety of ways, including higher charges to private-pay customers.

“Appropriate reimbursement is always an issue when you’re talking about Medicaid, whether you’re talking about the state or the MCOs (managed care organizations),” Eaton said. “It very rarely covers the cost to care for the person and by its nature is underfunded.”

‘Balancing act’

Kansas historically has had a relatively high percentage of people in nursing homes that pay for the services themselves without turning to Medicaid. But as baby boomers age and current economic imbalances harden over time, the prospect of greater reliance on Medicaid seems likely, those in the industry said, which makes the future look bleaker still for many small nursing home operators.

“It’s definitely a balancing act,” said Debra Zehr, chief executive of LeadingAge Kansas, a trade association that represents many of the state’s non-profit, long-term-care facilities. “The gap between costs and (Medicaid) reimbursements for our members approaches $20 a day on average,” per resident.”

There is a law on the books in Kansas that requires the state to periodically “rebase” or adjust its Medicaid reimbursements to nursing homes to more closely align with actual costs, but in each of the past three years, the Legislature has added a proviso suspending the requirement.

“They’re hoping to suspend that again (in the 2014 session),” Zehr said. “But costs continue to go up.”

Zehr said KanCare problems were just one factor among many that are pressuring those in the industry.

“It’s not perfect,” she said of the program, “but I think the general trend is toward getting better. We had one large system that said in the past (when the state ran it) they would be paid virtually 95 percent within 90 days for their nursing homes. Now, its about 82 percent full payment” within 90 days.

“But there are a lot of factors going on in the environment that make the future of nursing homes not a sure bet,” Zehr said. “Certainly, to the extent payments are delayed, that doesn’t help. But if we were going to attribute the causes of a (possible) closure, it’s not outright KanCare, but that the state hasn’t been fulfilling it full obligation for some years now on reimbursement.

A resident dances with a Country Care staff member. "We do a lot of dancing around here," said Tori Mance, director of nursing. Co-owner Tammy O'Donnell said dancing is fun and therapeutic for the residents. "Many of our residents may not be able to do much else, but they can dance. It's not all that different than being 18 months old — it's just fun," she said.

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“We haven’t been getting an inflation factor, to put it simply,” she said. “But that’s not in the hands of the managed care companies. That’s in the hands of KDADS.”

Officials at the Kansas Department for Aging and Disability Services said they are not proposing any more spending for nursing homes in fiscal 2014-15 than was already approved by the 2013 Legislature, which means that funding essentially will remain flat unless legislators choose to augment, which appears unlikely.

‘Nail in the coffin’

Margins are tight and Medicaid doesn’t pay enough to begin with, those in the industry say, so “if you’re shorted 3 percent that’s a big number” said Unrein, the LakePoint CEO. “The only thing you can do is cut costs, so that means cutting care,” he said, because 60 percent of costs are labor related and staffing must be reduced to make up the difference.

And then there are the ongoing federal changes, he said.

His company currently provides insurance coverage to about 150 of its 400 employees. But with the federal health reform law, many more — if not all — the employees are likely to sign up for the company’s health plan, pushing HighPoint’s costs to the breaking point. At least one of the company’s facilities — the one with the most Medicaid residents — might need to be sold, he said.

“Obamacare will be the nail in the coffin,” Unrein predicted. “All this stuff hitting at once. There’s no way.”

KHI News Service coverage of KanCare

Hutchinson Clinic's letter throws a curve to KanCare open enrollment (1/28/14)
National Disability Council again urges CMS to hold off on Kansas DD carve-in (1/14/14)
DD carve-in not approved for Jan. 1 launch (12/27/13)
National Council on Disability urges one-year delay of KanCare DD carve-in (12/13/13)
KDADS chief describes lessons learned with KanCare (12/5/13)
Other states watching Kansas as it implements ‘unprecedented’ Medicaid model (12/5/13)
KanCare reimbursement problems continue for providers (11/25/13)
Kansas dental program for children on hold because of KanCare MCO (11/11/13)
Kansas Medicaid providers complain to oversight committee (10/7/13)
Wichita hospital execs describe problems with KanCare (8/29/13)
KanCare to adopt “health home” model for treating mentally ill (7/22/13)
Kentucky’s rush into Medicaid managed care: A cautionary tale for other states (7/18/13)
DD groups largely reconciled to KanCare carve-in (7/15/13)
Advocates urge more government oversight of Medicaid managed care (7/8/13)
Independent pharmacists push for KanCare contract enforcement (7/1/13)
Payroll agents for the disabled on Medicaid say they are struggling under KanCare (6/3/13)
Personal Care Attendants: KanCare's unheralded workers (5/20/13)
House GOP leaders pen letter backing DD supports in KanCare (5/17/13)
More than 1,000 rally at Statehouse for DD carve-out (5/8/13)
Nothing to be done about coverage gap in states not expanding Medicaid, feds say (4/29/13)
As KanCare continuity of care period ends, problems persist; legislators starting to hear about it (4/8/13)
Advocates raise concerns over possible reductions in KanCare services (3/28/13)
Conferees agree on KanCare oversight committee (3/28/13)
DD advocates push to extend KanCare "carve-out" (3/20/13)
Safety-net clinics struggling with KanCare (3/4/13)
Major medical provider groups ask for longer KanCare transition (2/13/13)
Lawmakers and providers assess KanCare transition (1/28/13)
Five-part series: "Lower cost and better care: Can KanCare deliver?" (1/14/13)
Independence of KanCare ombudsman questioned (1/7/13)
KanCare special terms and conditions spelled out by CMS in a document (12/28/12)
KanCare workforce shift hampering local agencies (12/10/12)
Governor announces KanCare approval by feds (12/7/12)
More KanCare implementation details outlined (12/3/12)
Federal officials say they hope to act soon on KanCare waiver request (11/28/12)
New KanCare info included on state website (11/20/12)
Groups call for KanCare delay (11/8/12)
Go/no-go date looms this week for KanCare (10/15/12)
KanCare benefit packages outlined (9/26/12)
Provider groups nervous about lack of KanCare details (9/13/12)
KanCare Confidential (9/10/12)
KanCare contracts awarded (6/27/12)
KanCare plan panned again at public hearing (6/20/12)
Wichita KanCare forum draws more than 200 (6/19/12)
Medicaid makeover: Can Kansas learn from Kentucky? (6/11/12)
Hundreds protest inclusion of disability services in KanCare (4/25/12)
Counties weighing in on KanCare (4/9/12)
Hospital administrator to chair KanCare Advisory Council (3/29/12)
Brownback Medicaid makeover an “ambitious” plan (3/28/12)
KanCare bidders heavily courting Medicaid providers (3/19/12)
Legislators push to delay KanCare start (3/7/12)
Brownback announces managed care for all in Medicaid (11/8/11)
Kansas Medicaid makeover in the works (3/7/11)

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