The Indiana Division of Aging wants to change Medicaid rates to nursing homes to reward quality care and penalize the lack of it, leaving the industry divided over whether to support the groundbreaking rule or to seek revisions and a slower phase-in.
Division Director Faith Laird told members of the General Assembly’s Medicaid Oversight Commission on Wednesday that a proposed administrative rule change could reduce the amount of money Medicaid pays to poorly performing nursing homes by as much as $10 million per year and shift that money into waivers that pay for home and community-based services for seniors.
The state and nursing homes agreed to adopt a quality assessment fee paid by the homes as a way to leverage more Medicaid dollars, but now some homes object to the potential loss of the higher Medicaid rates they’ve been receiving. The fee has returned about $100 million annually to nursing homes since 2005.
However, Laird said the quality of care and level of staffing have gone down while administrative costs rose about 10 percent and owners’ equity and facilities’ cash balances each rose about 30 percent.
“The proposed rule change provides a financial incentive for good quality,” Laird said. If each of Indiana’s roughly 475 Medicaid nursing homes performs well, all could be paid more. “They all have the opportunity to do better.”
Rate increases for the best nursing homes would nearly double from $3 per Medicaid patient per day to $5.75. Those with the worst scores on annual State Department of Health surveys would lose the rate increases that the quality assessment fee created.
Advocates for seniors, joined by some nursing homes and developers of assisted-living apartments, supported the proposed rule change, which is due to take effect around Jan. 1.
“For the first time, it’s differentiating what we pay for good care and what we pay for bad care,” said Michelle Niemier, executive director of United Senior Action of Indiana.
Vince McGowen of Indianapolis-based Magnolia Health Systems said 16 of its 33 nursing homes would get rate decreases, but he supported the rule.
“This promotes patient care over provider profits,” McGowen said.
However, some nursing home executives said the rule change is moving too fast, needs a broader assessment of quality and, as proposed, would reduce the amount of money they spend in their communities.
Scott Piotrowicz, executive director of Valley View Health Care Center in Elkhart, said about $3 million of the $3.5 million that Medicaid pays his 126-bed facility each year stays in that recession-strapped northern Indiana city, but the rule change would cost it $120,000 during the first year.
Steve Albrecht of Golden Living said its 22 Indiana nursing homes would lose a combined $834,000 during the first year. He said other states use other measures of quality, including clinical data and patient-to-staff ratios.
“There are many ways to recognize and measure quality,” Albrecht said.
However, Laird said the operators only recently objected to using the Health Department survey scores to gauge quality, and she speculated some would object to whatever measure the state adopted.
Laird said the proposed rule goes before a Family and Social Services Administration rules committee Oct. 13 for approval. It then will need approvals from the attorney general’s and governor’s offices before taking effect.
The Medicaid Oversight Commission will vote on the rule Oct. 20, but Laird said that vote would not be binding.
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