Budget cuts fall on backs of nursing homes’ skilled care

April 19, 2013 

With all 2013-15 state budget proposals released, there is one common budget loser: the skilled care nursing homes provide.

With K-12 education funding paramount, the state – by keeping nursing home Medicaid reimbursement based upon 2007 costs through June 2015 — would save no less than $31.4 million. Yet that savings is at the expense of the most vulnerable, and is compounded by the loss of equal federal matching funds. Most of that double-damage would fall upon wages.

Look at just one local example. Heartwood Extended Health Care, a 120-bed facility, is the last family-owned nursing home in Tacoma. Operating since 1974, it has received a five-out-of-five quality rating from the federal government and leads Tacoma nursing homes in quality measures ranked by U.S. News & World Report.

Typical of nursing homes, most (55 percent) of Heartwood’s Medicaid rate goes to direct care — caregiver wages — while another 15 percent goes toward food, food preparation, housekeeping and laundry staff. When more than 70 percent of your reimbursement goes toward wages and food, there’s not much room to cut.

Largely due to the 2007 basis for reimbursement, the state already falls hundreds of thousands of dollars short of paying Heartwood’s billed costs. It is hard to make up for such a shortfall when more than half of your patients are on Medicaid.

Even worse, failure to update the 2007 basis for reimbursement ignores the Medicaid share-of-cost of the Affordable Care Act’s obligation next year for nursing homes to provide quality health care to all workers. Nursing home care is as close to a single-payer system as we have and already saves the state by caring for those who formerly would have been served in hospitals. How much more can we squeeze caregivers?

Further cuts could force independent facilities to sell out to deep-pocketed multistate corporations or venture capitalist firms. Would we want that?

Nursing homes are already losing under federal sequestration — with 2 percent cuts for those on Medicare, who typically comprise one-tenth of patients. Contrast that treatment to the big insurers offering Medicare Advantage plans that saw their stocks soar this month after the Obama administration cancelled a 2.3 percent efficiency cut for 2014 and replaced it with a 3.3 percent increase. Insurers might not provide care, but they certainly write campaign checks and lobby.

Here, Senate Republican Leader Mark Schoesler stated, “We chose the priorities of higher education, K-12 and early learning over the rest of government.”

Those are good priorities, and public education is our future. Yet “the rest of government” includes vulnerable citizens — in addition to those who serve them. The vulnerable poor must not be left behind as we improve education funding to satisfy our constitutional duty and the Washington Supreme Court’s McCleary decision.

Although House Democrats and Gov. Jay Inslee strain to avoid it, without new revenue that education mandate will inevitably rob social services of resources. Long-term care, particularly, needs sustainable funding as the 2018 commitment to fully fund K-12 education approaches.

To its credit, even the no-new-taxes Senate budget directed that, by the end of next year, the state should “develop a phased plan to expand services to meet the demands of an aging society” and study all long-term care funding options, including the possibility of a “public insurance option financed through mandatory contributions” — similar to Medicare.

Demographics are destiny. We must apply no less energy to planning for the needs of the elderly than we do to the needs of our kids. The 85-and-older population in our state — those most likely to end up in nursing home care at some point — will expand by over 30,000 this decade alone.

While looking to this future, in the near term the Legislature must still work this session to find the means to update 2007-based funding for the roughly 10,000 Washingtonians in nursing homes — even if, by way of triage, that requires increasing the fee nursing homes presently pay to draw additional federal Medicaid contributions.

Former State Rep. Brendan Williams is an Olympia attorney and long-term care advocate.

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