Pennsylvania’s nursing homes were underfunded by nearly $1.2 billion in Medicaid in 2019-2020, according to a report commissioned by the LeadingAge PA, an association that represents over 380 quality senior housing, healthcare and community services statewide. To begin helping address this inequity, the association is asking state lawmakers to approve a $294 million increase in Medicaid funding for the 2022-23 state budget.
Medicaid funding is provided to caregivers to cover costs for those who can no longer afford to pay for it. As one of the oldest states in the nation, Pennsylvania’s nursing homes care for one of the largest Medicaid populations in America. Pennsylvania’s Medicaid reimbursement rate has remained nearly stagnant since 2014, rising only one percent for half of the commonwealth’s providers in the 2018 fiscal budget.
“Gross inequities in Medicaid funding for Pennsylvania nursing homes began long before the pandemic and have continued to escalate,” said LeadingAge PA interim president and CEO Bob Bertolette in a press release. “COVID-19 created a dire situation in which some caregivers can no longer afford to fill their beds. In some cases, families who need care for a loved one cannot find it. This funding request should serve as the starting point for providing seniors with the support and care they deserve.”
The Pennsylvania Medicaid Funding Shortfall for Nursing Facilities study was released March 1. It was prepared for LeadingAge PA by advisory firm, RKL LLP. To determine the potential gap between nursing home expenses and the reimbursement amount facilities receive through the Medicaid program, RKL’s senior living services consulting group developed a custom database using publicly available Medicaid cost reports to conduct granular calculations.
“Pennsylvania’s nursing homes need reliable data to manage the industry’s unique profitability and management challenges,” said Jeffrey E. Boland, CPA, partner and leader of RKL’s Senior Living Services Consulting Group.
Chuck Quinnan, LeadingAge Pa senior vice presidents and chief of government affairs, said the nursing homes have been challenged with a workface staffing crisis and with Medicaid underfunding for quite some time.
“The situation has gone from serious to dire, “he said, “doing nothing will lead to facilities taking beds off line or closing completely.
In the Harrisburg area, the Hewish Home of Greater Harrisburg is in the process of being sold to a real estate investment company—their Medicaid gap was about $100 per day.”
Jonathan Hollinger, president and CEO Pleasant View Communities, said like so many other Pennsylvania companies, the 67 year-old Manheim-based retirement community, has experienced pressures of supply and workforce shortages leading to rising inflationary costs.
“However, unlike other businesses, we are unable to pass on these costs to our biggest customer, the state Medicaid program,” he said.
He pointed out that 15 years ago Pleasant View’s medical assistance reimbursement rate was $178 per day; today that rate is $189 per day. Hollinger said the mere 6% increase over 15 years does not even cover the current year’s inflation. He said in the last five years, hourly pay rates for CNAs (Certified Nursing Assistants) jumped from $13 per hour to $20 per hour.
“That’s over a 60% increase and currently this is not enough to keep up with other industries,” he said.
In the past 10 years, Pleasant View has provided over $30 million dollars in unfunded care costs. To help bridge the gap, Hollinger said Facilities like Pleasant View have used several strategies. Nursing and caregiver wages were held at modest levels, but this is no longer an option with the higher pay scales of hospital systems and non-healthcare jobs.
Another way to bridge the gap is increasing the rates for private pay seniors. Hollinger said at Pleasant View private pay seniors approximately 2.5 times the state medical assistance rates.
“But that means their life savings are depleted quicker, thus leading to more Pennsylvanians covered under the Medicaid program,” he said.
Hollinger said Pleasant View has also used reserves to bridge the gap. Those ‘rainy day’ funds were intended for building improvements, to repair parking lots and sidewalks, new roofs, or updated equipment and technology, which have been delayed since funds were shifted to bridge the Medicaid funding gap.
“I see this as a real healthcare crisis,” Hollinger said. “The continued underfunding of medical assistance for senior care will cause organizations like Pleasant View to continue to lose staff and be forced to provide care to less and less seniors as beds and entire nursing wings will be shut down. Reductions in skilled nursing care will lead to acute care for seniors being provided at higher costs in an already taxed hospital system. Senior living organizations simply cannot financially afford the continued gross underfunding of skilled nursing care for our Pennsylvania seniors.”
Quinnan said the Medicaid system itself needs to be addressed. He called on the state to strengthen the system and create a sustainable solution.
“We all want our communities to not only survive, but thrive,” Quinnan said.
He said Gov. Tom Wolf’s proposed new funding for nursing homes in his 2022-2023 budget is linked to facilities “meeting the administration’s misguided regulatory proposal to increase minimum staffing thresholds by 50%”. Quinnan said those staffing requirements are unrealistic because facilities lack funding to hire more employees and, even if they could, there is a critical worker shortage across the state.
“More staffing does not necessarily produce better care in many cases,” he said.
Rochelle Shenk is a freelance writer
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