Analysis Suggests Big Financial Impact To Nursing Homes If Medicaid Reimbursements Are Cut

CARSON CITY – An analysis of a cut in Medicaid payments to skilled nursing facilities proposed by Gov. Brian Sandoval paints a sobering picture for the industry and its future in Nevada.

The analysis was performed by Eljay LLC using cost report information from 32 of Nevada’s skilled nursing facilities. It evaluated what the loss of $20 per Medicaid patient per day residing in a skilled nursing home would mean. The company provides consulting services on design, redesign and implementation of Medicaid payment systems for nursing homes.

The conclusion: the $20 rate reduction would equate to an average loss of almost $500,000 for each of the facilities used in the analysis.

“Three facilities would have annual revenue reductions exceeding $1 million,” it says. “After the rate reduction, the average shortfall between Medicaid allowable costs and the rates paid would be almost $40 per patient day.

“For a 100-bed nursing home with 60 Medicaid patients, the average annual loss for caring for Medicaid patients would now be $870,000,” the analysis says.

It says a $500,000 reduction in Medicaid payments is the equivalent of about 15 percent of a 100-bed facility’s workforce.

“As a result, patient care would likely be seriously jeopardized and some facilities would likely have to close,” the Eljay analysis says.

The analysis is dated November 2010 but is based on the reductions in Sandoval’s budget.

The reduction in reimbursement is one of several Medicaid rate reductions 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.

The information in the analysis could come up at a hearing before the Senate Finance Committee this morning. The panel is set to take up Senate Bill 54 dealing with a tax nursing home operators agreed to impose on their industry several years ago to improve the quality of care to residents at their facilities.

The Department of Health and Human Resources has requested changes to the Fund to Increase the Quality of Nursing Care in order to implement the rate reduction.

Renny Ashleman, a lobbyist representing the Nevada Health Care Association, which represents the skilled nursing industry, said the language in the law has to be changed because the tax, which is matched with federal funds, was intended to augment funding for the facilities.

The proposed rate reduction would save the state general fund about $10 million, but the actual loss to the facilities is about $23 million when matching federal funds are included, he said. Ironically, the $23 million loss is just about what the tax generated to the facilities, Ashleman said.

In testimony in support of the bill before the Senate Health and Human Services Committee in February, Charles Duarte, administrator of the Division of Health Care Financing and Policy, said the reductions in Medicaid reimbursements are part of a budget that attempts to preserve essential services to Medicaid recipients. Any proposal to restore the cuts would have to include equivalent savings from other areas of the budget, he said.

Officials with Nevada’s skilled nursing facility industry have said the reduction in Medicaid reimbursement would lead to the closure of as many as five facilities, reducing the number of beds for the elderly needing their services by 700.

  • Anonymous

    you can’t afford old people when you obligate yourself to give cops and fire $250,000.00 a yr and 100K per yr retirements, come on get a clue