Proposed Medicaid Cuts To Skilled Nursing Homes Would Require Closures, Layoffs, Industry Officials Say

CARSON CITY – Representatives of Nevada’s skilled nursing home industry say up to five facilities could close and 700 beds lost if a proposal in Gov. Brian Sandoval’s budget to cut the Medicaid reimbursement rate by $20 a day per patient comes to pass.

The closures would result in well-paid medical professionals being laid off and joining the ranks of Nevada’s already sizable population of unemployed, industry officials say.

It could also cause crowding problems in acute care hospitals because there would be no room in nursing facilities to take the seniors who are ready for release.

The reduction in reimbursement is one of several Medicaid rate decreases proposed for many types of medical providers as a way to help balance Sandoval’s proposed $5.8 billion general fund budget.

The skilled nursing reductions would save nearly $10 million over two years. All the Medicaid rate reductions to all medical providers would save nearly $60 million in total over the same period.

Donna Henderson, regional operations manager for Evergreen Health Care, which has five facilities in Nevada, said she does not expect to close any buildings. But layoffs are likely and Medicaid admissions will have to be capped if the cuts take effect, she said.

“It is better for me to have empty beds than Medicaid patients,” Henderson said. “We have not had a rate increase in Nevada in over nine years. I’ve been in the business for 32 years. These are dark times for long-term care.”

While her two facilities in Carson, one in Gardnerville, one in Ely and one in Pahrump are expected to remain open if the reimbursement rate cut takes effect, Henderson said she does believe there are other facilities in the state that will have to close their doors.

“They just won’t be able to operate under those conditions,” she said.

Daniel Mathis, chief executive officer for the Nevada Health Care Association, said the Medicaid reimbursement rate right now is $12 below cost, on average, for the skilled nursing industry in Nevada. Add another $20 reduction and the industry faces tough choices, he said.

“There is a business decision that has to be made by the providers: do they want to accept that patient,” Mathis said. “Because they are looking at if they do, they are going to lose money and be held accountable for providing care for that patient, and if they don’t their census will drop and their operation will fail that way as well.”

Charles Perry, president and government affairs liaison for the association, which represents Nevada’s long-term care industry, said it is an access to care issue. When hospitals have elderly patients ready for discharge, it is the skilled nursing industry that frequently takes them to provide a lower cost of care as they continue their recovery, he said.

“We are the hospitals’ safety-relief valve,” Perry said. “Now if we can’t take the patient out of the acute care hospital, that creates a problem within the hospital.”

Perry declined to name the facilities he expects will have to close if the rate decrease takes effect, saying to identify them would create panic for residents, their families and staff. The status of the reductions won’t be known until the Legislature finishes the budget in late May, he said.

“I can tell you there will be a large impact, if it comes to pass, in the rural areas,” Perry said.

Mike Willden, director of the Department of Health and Human Services, rejected the idea that rural nursing facilities would be forced to close if the rate reduction is implemented. Those rural facilities that are part of an acute care hospital are not affected by the proposed reduction but are reimbursed for their costs, he said.

The rate reduction would affect the 47 or so free standing skilled nursing facilities operated in urban areas of the state, Willden said. The agency does not have a lot of data on the profitability of the skilled nursing facilities, he said.

“I don’t know if they are making a profit or not,” Willden said. “I assume heretofore they have made a living or there wouldn’t be 47 facilities in business.”

Willden did note that the number of Medicaid recipients receiving care in a skilled nursing facility has remained stable over the past eight years at about 3,100 residents. Much of that has to do with providing less costly care in less restrictive settings, including the use of adult day care and home health care aides, he said.

These efforts are in keeping with a landmark 1999 U.S. Supreme Court decision called Olmstead, which requires minimal use of institutionalization, Willden said. An independent consultant in 2010 found that Nevada has been, “one of the leading states in the country in its commitment to Olmstead.”

Perry said the association is meeting with the hospitals as well to present a united front against the reimbursement rate reductions.

“We don’t want to get into a situation where we’re pitting provider against provider,” Perry said.

Darrin Cook, vice president of clinical and operational services for Fundamental, which has a number of facilities in Nevada, said the payment reduction could create a domino effect from layoffs to decreased quality of care to increased violations identified by state and federal regulators.

Patient care could suffer, and that would not do anyone any good, he said.

“It could mean closures, staff reductions, pay reductions,” Cook said.

Audio clips:

Charles Perry of the Nevada Health Care Association says skilled nursing facilities are the relief valve for hospitals:

032211Perry1 :25 within the hospital.”

Perry says naming the facilities that could close would create unrest:

032211Perry2 :11 unrest and uncertainty.”

Perry says if the rate decrease is approved, it would affect rural areas of the state:

032211Perry3 :09 the rural areas.”

Darrin Cook of Fundamental says the rate decrease could mean staff reductions and pay reductions:

032211Cook1 :11 in the country.”

Daniel Mathis, CEO of the Health Care Association, says the reduction will force providers to make difficult business decisions:

032211Mathis1 :22 as well, so.”