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Washington skilled nursing faces tough times due to Medicaid

September 20, 2018
by I Advance Senior Care
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It’s unlikely that the state of Washington intended to put its skilled nursing facilities on the brink of disaster when it overhauled its Medicaid system in 2016, but leaders of both LeadingAge Washington and the Washington Health Care Association (WHCA) said that’s exactly what has occurred as providers across the state try to keep their doors open.

“At this point I can’t even tell you how they’re coping. That’s how bad it is,” WHCA president and CEO Robin Dale told Skilled Nursing News.

According to Skilled Nursing News, some facilities are planning to exit the skilled nursing space entirely as a result. Others are taking a hard look at their spectrum of operations to add services and creativity to their business plans.

The environment wasn’t always so difficult in the state. In fact, Washington’s Medicaid reimbursements were among the highest in the country in 2000, Dale said. But ever since, the rates have been falling. The setup that the state implemented around 1995 or 1996 was a good system, “but terribly, terribly complex,” and it was difficult to implement change when that was necessary, according to Dale, who took the role of CEO at the WHCA — which represents for-profit providers — in 2014.

“We had not gotten any significant rate increase for years,” he said. “There were actually a couple of cuts. There was a hole that had been dug that was very hard to get out of it. It seemed to me and to some people that I worked with that it was time for a simplified system.”

That process began in 2015, and the new system was finalized the next year. The first new rates took effect on July 1, 2016.

Before then, SNFs were paid based on the cost of providing care or services to residents, with the payment rates adjusted based on the acuity of clients served, LeadingAge Washington CEO Deb Murphy told SNN; her organization represents non-profit long-term care providers in the state.

“Come 2016, we have shifted the way in which we are paying for nursing facility care, and the new payment system basically establishes a price so all SNFs are now largely paid the same … essentially set at the median,” she said. “So with 210 or so facilities in the state that means half of those facilities have costs that are above the median and half of the facilities have costs that are below the median. But the median is used to set the price the state is willing to pay for the cost of care.”

The rate is still adjusted based on acuity, so the higher the acuity of a patient, the more dollars the SNF will receive, and vice versa, Murphy added. Geographic area and the resulting cost of living is also factored in, but the core of the Medicaid reimbursement is still based upon the median cost of providing care.

“It’s a median, and then it’s adjusted for location and case mix,” Christopher Wielga, financial policy analyst at LeadingAge Washington, said. “The average rate is about $215 a day.”

Though there are different estimates of how big the gap is between that rate and the cost of providing care to a Medicaid resident, providers agree that that reimbursement isn’t sufficient by itself, Wielga told SNN.

Read the full story at Skilled Nursing News.

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