June 22, 2015
Contact: Eric Kiehl, 717-221-7935
Cell: 717-599-2077

Final Budget Should Protect Pennsylvania Seniors

Medicaid funding for state’s skilled nursing centers needed to support quality care

HARRISBURG — Pennsylvania’s seniors—especially those who are elderly and frail—are at risk for nursing home care because the centers that provide care are on a financially unsustainable path. It is essential that Gov. Wolf and lawmakers provide a small, “cost of living” budget increase for nursing homes as well as to again fund a program that preserves access to care by providing an incentive payment to centers that care for a higher-than-average percentage of Medicaid residents

“Pennsylvania’s population is aging rapidly and the demand for long-term care services is growing, especially among residents and patients who have higher acuity levels, more complex medical needs and chronic health conditions that require around-the-clock care,” said Stuart H. Shapiro M.D., CEO of the Pennsylvania Health Care Association and Center for Assisted Living Management (PHCA/CALM). “The goal now is making sure they continue to get the services they need to live a healthy, safe, high-quality life with the dignity and respect they deserve.”

“For many, services at home can be safely and cost effectively delivered. For many others, a nursing home is the most appropriate setting for safe and cost-effective care,” Shapiro said. “While all services to the elderly deserve support, no provider loses as much money as skilled nursing facilities, whose Medicaid percentage is the largest among settings providing long-term care.”

According to a recent study by Avalere Health, a respected Washington, D.C., research company that focuses on health care, Pennsylvania’s skilled nursing centers saw their operating margins drop by more than 60 percent between 2007 and 2012, from 3.2 percent to 1.2 percent. For facilities with 75 percent or higher Medicaid residents, those margins dip 80 percent over the same time frame, to just 0.3 percent.

Pennsylvania now ranks among the worst in the country with respect to Medicaid reimbursements, according to a study by Eljay LLC, a nationally recognized leader in long-term care consulting.

The commonwealth reimburses nursing centers an average of $23 a day less per resident than the true cost of care. That shortfall has almost doubled since 2007, when it totaled $13.23 per resident per day. With 65 percent of all nursing center residents relying on Medicaid to pay for their care, nursing centers now lose an average of $8,500 per resident every year on two-thirds of the individuals in their care. Pennsylvania’s Medicaid program doesn’t come close to covering the real cost of care.

Skilled nursing facilities care for the state’s sickest and frailest residents, such as those with advanced dementia or severe chronic health conditions that require around-the-clock care. Over the years, the acuity (sickness) level of residents has increased, as has the cost of care. But funding hasn’t kept pace.

“The patients of today’s nursing centers often require intense care and have medical needs such as dialysis, chemotherapy, serious wounds, IV therapy, tracheotomies, ventilators, high flow oxygen, traction and much more,” said Dr. Shapiro.

Skilled nursing facilities cannot invest in necessary capital improvements or advanced technology that would enhance care, nor can they pay competitive wages that would increase staff retention, which is so vital to high-quality care. Some facilities have had to turn away seniors on Medicaid because they cannot afford their care, creating access to care issues in parts of the state.

PHCA/CALM is seeking an increase of 2.4 percent in Medicaid payments to nursing homes to cover the ever increasing cost of care. The 2.4 percent is the three year average increase in the nursing homes market basket used by the Centers for Medicare and Medicaid Services (CMS) to set Medicare rates. The market basket represents how much more it would cost a nursing home each year to purchase the same mix of goods and services. This increase equates to $36 million in state funds, which will bring in an additional $40 million in federal funds.

Advocates also called on the General Assembly to once again fund a program that they created last year to aid nursing homes that care for a higher-than-average percentage of residents on Medicaid. That “add on” program would cost the state $16 million, while bringing in an additional $17 million in federal funds, to ensure seniors on Medicaid have access to long-term care in the communities where they live.

“PHCA is committed to working with Gov. Wolf and the entire General Assembly to ensure our sickest, frailest elderly residents have access to the services they need to live a healthy, safe, high-quality life with the dignity and respect they deserve,” said Dr. Shapiro, adding, “Nursing home workers and families from across Pennsylvania are here today with a singular message for the Governor and the legislature as they build a state budget for next year—additional funding for those frail elders in nursing homes should be among their highest priorities.”

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