Medicaid crisis still looms

Published 12:00 am Wednesday, July 21, 2004

Though the Legislature “fixed” the Medicaid crisis that had been brewing since voters turned down Gov. Bob Riley’s tax proposals last September, some say that fix is only temporary.

In May, the Legislature took action to essentially stablize fuding for many nursing home operators.

At that time, many were considered to be a month away from financial disaster.

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Now those programs have funding through the 2004 fiscal year and the 2005 fiscal year.

But another crisis is brewing for the 2006 fiscal year, according to some in the industry.

Mike Jordan, public relations director for the Alabama Nursing Home Association, says the measures that were approved by the special session of the Legislature which ended on May 17 included:

– Medicaid fully funded through the end of FY 2004 and for FY 2005.

The supplemental appropriations bill that passed on the last day of the special session means that Medicaid can pay all Medicaid providers in a timely fashion.

Before the Legislature’s action, payments were running almost one month behind schedule, Jordan said.

– The General Fund budget for FY 2005 also passed on the last day of the special session.

That budget fully funds Medicaid and all other human service agencies, Jordan said.

The budget was balanced with additional tax revenue, including a $700 increase in the annual nursing home bed tax – from $1,200 to $1,900 per bed – raising approximately $13.3 million state dollars that is matched, in turn, approximately three-for-one by the federal government.

On the surface the system might look fixed, but nursing home operators who have been dealing with one crisis after another in the Medicaid system say that it is still essentially broken, and that in FY 2006 they will face another cliff.

“We just put a patch on Medicaid,” said Michael Britton, administrator of Warren Manor Health & Rehabilitation Center. Revenue crises will continue to recur over and over again until something is done to solve the basic problem. The increase in the bed tax was less than had been originally proposed but at this time, any increase in our costs hurts. We need to be genuinely concerned about doing what is best for nursing homes and the state at large.

“I always try to be optimistic about the future, but if all the parties involved could get together and work together on the same road to a solution, that solution would come much more quickly,” he said.

Armelia Oliver, administrator of the Light House Rehabilitation & Healthcare Center, said essentially the same as Britton.

“We’re still in the Band-Aid stage,” she said. “In one or two years we’ll be facing the same problems as before the Legislature’s recent actions.”

On the other hand, Oliver is not surprised that nursing homes and Medicaid are facing problems. “Everyone else is,” she said. “So many programs and entities are having problems,” she said. “We all have to work with what we have.”

On the nursing home bed tax increase, Oliver is philosophical.

“We are more comfortable with the $700 increase that passed than the larger one that had been proposed.”

Unlike some operators, Oliver is not upset that the bed tax which provides federal matching dollars for all Medicaid recipients -not just nursing homes- is fair. “It’s our contribution to the long-term care side of Medicaid,” she said.

Charles Hise, owner of Park Place Nursing and Rehabilitation Center, like the others is concerned about the future, but also the present.

He noted that there was a two-week delay in his Medicaid payment due at the end of June and such delays make it very hard to run a business, and he hopes the recent delay – after the Legislature had met – will not be repeated.

Hise offered a more comprehensive critique of the burdens under which nursing home operators work than the others. He does not like the bed tax at all, especially because it is not earmarked for Medicaid funding for nursing homes. To Hise it doesn’t make sense for nursing homes to be providing matching funds for all Medicaid programs.

Hise also points to the high percentage statewide – and locally – of Medicaid residents in nursing homes: around 78 percent. So if payments are late, it creates a major impact on cash flow.

Third, the regulation of nursing homes, in Hise’s opinion, is burdensome and becoming more so. A particular sore point is Congress’ repeal several years ago of a provision prohibiting Congress from passing regulations without reimbursing Medicaid-funded entities for extra staff time and expense required to comply with the regulations. He gave several examples of new regulations that are diverting nurses who should be taking care of patients more and more to paperwork.

Summing up Park Place’s (formerly Dunn’s Nursing Home) problems with Medicaid and the government regulation in general, Hise said, “It’s been a roller coaster.”

And the problems will continue unless permanent solutions are found, he said. “In FY 2006 we will be worse off than we were before the Legislature acted,” he said, “if projections of shortfalls hold true.”