Skilled Nursing Care Devastated by Medicaid Underfunding, Study Shows

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A study released by the American Health Care Association (AHCA) predicts the shortfall in Medicaid funding for seniors’ long-term care needs will reach $6.3 billion in 2011.

Additional analysis in the report shows the projected national average shortfall equates to a $19.55 per patient per day loss – up from the $16.54 per patient per day loss in 2009.

For the average 100-bed nursing facility where approximately 63 percent of residents rely on Medicaid, this shortfall translates into an additional cost of $1,230 per day more than is reimbursed by Medicaid to care for those residents.

“Cutting back during tough economic times isn’t easy, especially when state underfunding leaves care providers to pick up nearly $20 each day for approximately two of every three individuals who rely on Medicaid for the nursing facility care they need,” said Mark Parkinson, president & CEO of AHCA and former governor of Kansas.

The projected Medicaid shortfall represents a new high, while the percentage of allowable costs covered by Medicaid is at the lowest point since 2003. Soaring state budget deficits and the expiration of federal stimulus funds as of July 1, 2011, contributed to what the study calls “a low point in the 10 years that this annual report has been compiled.”

“Limited state resources, sagging state economies and continued rebalancing efforts are reflected in the at least 60 percent of states that have either reduced Medicaid rates or provided no Medicaid rate increases for FY 2012,” said Joseph Lubarsky, President of Eljay, LLC, who authored the report.

States with the greatest underfunding of nursing facility care in 2011 include New York, Wisconsin and New Jersey.

Nursing facilities in Wisconsin and New Jersey have a projected per patient per day loss of $41.13 and $34.04, respectively, while New York tops the chart with a loss of $42.48 per patient per day. New York also has the dubious distinction of being the state with the greatest overall Medicaid underfunding, which the shortfalls report projects to be $1.2 billion in 2011.

Other key findings in A Report on Shortfalls in Medicaid Funding for Nursing Home Care are as follows:

  • The average shortfall in Medicaid reimbursement for nursing home care is projected to be $6.3 billion for 2011, or $19.55 per Medicaid patient day.
  • Medicare cross-subsidization of Medicaid continues to serve an important function in sustaining nursing home care. In 2009, the combined reimbursements from both Medicare and Medicaid resulted in break-even operating margins for nursing facilities.
  • With Medicare rate reductions scheduled for 2012 and Medicaid margins projected at a negative 14 percent, a facility’s combined margin from these two government programs will not even break-even – reaching only a negative 2.7 percent.
  • Medicaid reimburses about 90 cents for every dollar of allowable cost incurred in providing nursing home care for a Medicaid patient in 2011.

For more information, visit the AHCA website or download the report.

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