Wolf pushes $91 million for nursing homes to offset costs of proposed regulations, but industry says it’s not enough

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Spotlight PA’s Jaxon White Story

HARRISBURG — Governor Tom Wolf is asking the Pennsylvania Legislature to spend millions to increase a key reimbursement rate for qualified nursing homes in the state to help offset the costs of proposed new regulations that would increase daily care required.

With the state’s June 30 budget deadline fast approaching, the Democrat wants to earmark $91.25 million to increase the amount of money qualified nursing homes receive for residents on Medicaid.

About 11,000 long-term care residents in Pennsylvania have died since the start of the COVID-19 pandemic, a toll that has drawn renewed attention to long-standing issues such as dangerously low staffing requirements and outdated regulations.

Groups including the Pennsylvania Health Care Association, which lobbies on behalf of the state’s long-term care providers, say the state’s low Medicaid reimbursement rate is a major barrier to providing levels of higher care. The current rate, they say, may leave care homes without funding to raise employee salaries or buy patient care supplies.

The association estimates that Wolf’s investment would increase the daily Medicaid reimbursement rate to about $210 per resident on average from the current average rate of $199.96. Neighboring states such as Ohio, Maryland and New Jersey have higher rates.

But while the PHCA sees Wolf’s proposal as a welcome first step, the organization argues it’s not enough. The trade group estimates the regulatory changes would require hiring 10,000 more workers and spending an additional $434 million a year. This has led some to dismiss the plan as an unfunded mandate.

According to the Pennsylvania Department of Health, there are 683 nursing homes in the state serving approximately 80,000 total residents. This number is expected to increase in the coming years as the state’s population over the age of 65 grows. According to the PHCA, about 66% of residents living in nursing homes across the state have their stay paid for by Medicaid. Health insurance accounts for an additional 13%.

It seems that lawmakers agree that more investment is needed, but how to do it is still debated. If funding for nursing homes remains as is, advocacy networks, experts and nurses on the ground worry that facilities will be ill-equipped to support the aging population.

“We’ve gotten to a point where we either have to invest in long-term care in this year’s state budget or the whole system could collapse,” said Zach Shamberg, president and CEO of the leadership of the Pennsylvania Health Care Association. “It would be disastrous for our elderly population.”

Why are refunds important?

With the way Medicaid and Medicare funds are distributed, many nursing home facilities seek to accommodate Medicare-funded patients rather than Medicaid-funded patients.

“We have decided in this country not to cover long-term nursing care in Medicare,” said David Grabowski, professor of health care policy at Harvard Medical School. “So that’s really the only major piece of service that’s being transferred to Medicaid today.”

Medicare is a federal insurance program that typically covers short-stay patients, such as physical therapy or post-surgical care patients.

Medicaid is a state-run assistance program that, under federal government guidelines, supports low-income people and generally covers long-term patients. The reimbursement rate is what each nursing home is paid on behalf of the patient qualified by the state government.

According to Grabowski, Pennsylvania’s low Medicaid reimbursement encourages nursing homes to seek out Medicare patients planning short stays rather than accepting Medicaid patients who will require long stays.

This dynamic, he continued, makes the federal government “a very generous payer,” and this windfall allows healthcare facilities to typically achieve double-digit margins on short-stay patients. Meanwhile, Medicaid patients typically drive negative margins for facilities, he said, causing a gap between the cost of care for residents and the amount of state funding.

According to a study conducted in February for AP LeadingAgea trade association that represents about 380 providers across the state who serve the elderly, the daily discrepancy between what nursing homes received for Medicaid residents and what they spent was $86.26 per resident on average.

Grabowski said increasing the Medicaid reimbursement rate could alleviate some of the problems. Lobbyists and industry advocates in Pennsylvania are requesting an investment of $294 millionrather than the $91.25 million offered by Wolf.

Grabowski argues that any investment in the industry should also involve some form of accountability to ensure funds improve quality and are not misused.

“I think we’re going to have to rethink what it means to both live and work in a nursing home,” Grabowski said. “Because the current economic model is definitely broken.”

More money, more surveillance

Wolf’s $91.25 million pitch comes with proposed regulations that requiring nursing homes to provide more hours of direct resident care.

State House and Senate Republican spokespersons confirmed that the caucuses would review the proposal and continue to invest in nursing homes, but did not provide details.

In 2020, Spotlight PA reported on long-criticized staffing and training rules who have been exposed by the pandemic. Shamberg said the PHCA has found that in addition to rising costs nationwide, nursing homes face the same issues today.

Since the start of the pandemic, the state has earmarked nearly $500 million for nursing homes through Acts 24 of 2020 and 2021. These funds were intended to help ease the burden of additional costs related to COVID- 19. But as one-time infusions, the PHCA said the money does not close the Medicaid reimbursement rate gap and therefore does not increase staffing.

Karen Hipple, a licensed practical nurse at Oil City Healthcare and Rehabilitation Center in Venango County, said staffing ratios are too high — with one certified practical nurse caring for 20 to 30 patients, at facilities in which she worked and visited. She said increasing staff numbers must be the top priority, which requires more funding.

Hipple blames the shortage on the low wages faced by many nursing home workers. According US Bureau of Labor Statistics datathe average salary for a licensed practical nurse is $16.44 per hour.

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