Pa.’s graying population shortchanged by years of flat-funding Medicaid

The governor and the legislature then look at the numbers and determine the state cannot possibly pay what it owes and institute a “budget adjustment factor” that caps spending on Medicaid rates for nursing facilities. Providers tell their stories about how cutting Medicaid will lower quality and force facilities out of business. The legislature passes a budget that maintains a budget adjustment factor to reduce the rates called for in regulation in order to fit into the overall spending plan. Despite this, providers are again forced to comply with all of the state regulations and cost increases.

Gov. Tom Corbett’s 2011-12 budget proposal calls for a reduction in funding of around 2 percent. It also represents the fourth year in a row that the Medicaid line item for long-term care facilities has remained essentially flat. Considering the massive cuts other groups face with this budget, perhaps the governor and legislature assume that providers would view flat funding for long-term care positively. Certainly we are not unmindful of the severe budget constraints facing our state and, of course, we are relieved that the governor is not proposing to lower rates even more below what the regulations mandate. But this “dance” cannot last much longer.

The dirty little secret is that both the governor’s office and the legislature know that the Medicaid rates are completely insufficient to pay for the quality care the state expects providers to maintain for Medicaid recipients. They rely on the fact that facilities will make up the difference by charging private-paying residents even more — in essence, a hidden tax increase on people already strapped with enormous bills. They also rely on facilities continuing to cut costs through lower wages, fewer benefits and less staff while still meeting all of the regulations and interpretations of numerous state agencies.

Well, nonprofit long-term care facilities are finding that they can no longer play this game. On average, the rate for Medicaid recipients in nonprofit facilities is only 81 percent of actual costs. And the gap continues to grow. Over the past few years, numerous nonprofit providers have had to close or have been sold, mostly to out-of-state companies, because they can no longer provide the type of quality residents deserve for the rate the state pays. Some of those facilities have been mainstays in the community for generations. Many are among the largest employers in the community.

Most people know that Pennsylvania is one of the grayest states in the nation, with an over-85 age population growing at ten times the general population. The debate in Harrisburg has unfortunately been reduced to funding 24/7 nursing facility care versus funding care and services in a senior’s home or elsewhere outside a facility.

This is not an “either/or” proposition. Pennsylvania’s growing senior population will need more of both home and community-based services and 24/7 care and services, whether in a nursing facility or elsewhere.

Given the reality of the massive growth in Pennsylvania’s 85-plus population, the sheer numbers of elderly who will need round-the-clock extensive health and rehab services that can only be provided by long-term care facilities will not shrink. At the same time, the need to invest in additional opportunities for home and community-based services will grow as well.

We have been warning for years that the time will come when the insufficient funding of Medicaid will result in the closure of facilities. That time has arrived for not-for-profit facilities.
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Ron Barth is the president and CEO of Panpha. For more information, please see: www.panpha.org.