November 16, 2015
Contact: Eric Kiehl, 717-221-7935
Cell: 717-599-2077

PHCA Testifies On Nursing Home Wage Practices

HARRISBURG —  W. Russell McDaid, President and COO of the Pennsylvania Health Care Association and the Center for Assisted Living Management (PHCA/CALM), testified today in front of the House Democratic Policy Committee on House Bill 1449.

“Each and every day, the hardworking men and women in Pennsylvania’s skilled nursing facilities provide the highest level of care to ensure our sickest, frailest elderly and disabled residents live a healthy, safe life and age with dignity and respect,” said Mr. McDaid. “Over the years, the acuity (sickness) level of these residents has increased. As the level of care needed by nursing facility residents has risen, so has the cost of care.”

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.

The goal is to ensure they continue to get the services they need to live a healthy, safe, high-quality life with the dignity and respect they deserve.

“According to a 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,” Mr. MdcDaid noted. “For facilities with 75 percent or higher Medicaid residents, those margins dip 80 percent over the same time frame, to just 0.3 percent, well below the margins needed to keep pace with the increasing costs of care they face.”

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.

Pennsylvania’s Medicaid program doesn’t come close to covering the real cost of care. Two-thirds of the residents are on Medicaid, and for each one of them the cost of care exceeds the Medicaid payments by an average of $23 a day or $8,500 annually.

“We look forward to working with Gov. Wolf and the entire General Assembly on a final state spending plan which begins to ensure that there are adequate funds to meet the growing demands for long-term care and to be able to provide our staff with the wages they deserve,” said Mr. McDaid. “Some facilities have been forced to turn away seniors on Medicaid because their costs are so much higher than Medicaid payments, creating access to care issues in parts of the state.”

Because of this chronic underfunding, 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.

PHCA 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. This increase equates to $36 million in state funds, which will bring in an additional $40 million in federal funds. The market basket represents how much more it would cost a nursing home each year to purchase the same mix of goods and services.

To help preserve access to care for our most vulnerable populations, PHCA is also seeking continued funding for the Medicaid Access Program that the legislature created two years ago. This program provides incentive payments to centers that serve high Medicaid populations. We are asking for $16 million in state funds, which will bring in an additional $17 million in federal funds.

Despite this chronic underfunding, from the first quarter of 2014 to the first quarter of 2015, Pennsylvania nursing homes improved on 10 of 11 quality measures, according to the U.S. Centers for Medicare & Medicaid Services’ five-star rating system, and now rank better than the national average on 8 of the 11 measures. We are proud that by the end of 2014, 471 homes were ranked three stars or higher, with 178 scoring four stars and 179 achieving the highest ranking at five stars.

Pennsylvania nursing homes receive fewer deficiencies than the national average, and rank the lowest in the number of serious deficiencies per home, which means that the state’s nursing homes rank better than all other 49 states. For more information on the quality care provided by Pennsylvania’s skilled nursing facilities visit

Pennsylvania’s skilled nursing facilities and the dedicated caregivers they employ should be applauded for the quality care they provide in the face of real financial challenges.

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