State budget inaction will put nursing home providers out of business, low-income seniors and adults with disabilities out on the street

Harrisburg, PA (August 3, 2023) — Pennsylvania nursing home providers are warning state officials of the catastrophic implications a state budget without imperative funding will have on the care of low-income seniors and adults with disabilities. Additionally, the ongoing budget impasse is preventing legislative action from correcting state Medicaid reimbursement updates that are poised to create severe financial volatility –– further harming the care of low-income residents. Such action can be incorporated in the state’s Fiscal Code.

“With education funding continuing to be the focus of this year’s state budget, seniors and adults with disabilities have, thus far, been overlooked –– particularly those who are less fortunate and require essential and specialized nursing care,” said Zach Shamberg, president and CEO of the Pennsylvania Health Care Association. “Simply put, a budget that doesn’t include adequate funding for the new state staffing mandate –– and honor the commitment made to providers –– will upend the entire health care continuum. In the midst of ongoing negotiations, the focus has been on future generations instead of our older generation –– our fastest growing demographic, one we will all be a part of one day.”  

The 2022-23 state budget included an agreement between Pennsylvania’s former governor, Tom Wolf, legislative leaders, workers’ unions and industry stakeholders to increase nursing home staffing requirements in both 2023 and 2024 if commensurate funding was included in state Medicaid reimbursements. Pennsylvania funded the 2023 staffing increase, but 2024 reimbursement rates are set to fall well short of the estimated cost. Governor Josh Shapiro’s budget proposal for nursing facilities –– and the budget that currently awaits his signature –– includes an approximate $3.99 per resident per day (PRPD) funding increase. PHCA has advocated for a $12.50 PRPD increase to cover the cost of the state’s staffing mandate, as well as investments to enhance the care of our loved ones and neighbors. 

Complicating matters, the Department of Human Services (DHS) has performed an annual rebasing of reimbursement rates which now factors in more provider COVID-19 costs. This change in data to calculate reimbursements has created grave financial volatility within the new rates that are intended to reimburse providers for the resident care costs already paid for by the provider. Nearly 4,000 Medicaid-reliant residents at 70 nursing homes are positioned to lose, on average, $19 a day in funding for their care –– an extreme swing of five percent or more in rates for some providers that has the potential to close facilities and force residents to lose their care. PHCA has advocated for a legislative fix in the state’s Fiscal Code to limit the volatility. With a federal deadline nearing for the state to finalize the rates, the budget impasse is fueling a doomsday scenario. 

The third concern with the budget impasse is the fate of the Medicaid Day One Incentive (MDOI) program, which further supports nursing homes caring for high-Medicaid populations. The budget delay leaves providers uncertain as to whether they can expect the program to timely allocate funds.

“The fallout from unfunded mandates and a reimbursement system that doesn’t account for a costly pandemic will be catastrophic for long-term care providers who are simply trying to care for our state’s most vulnerable and low-income population,” Shamberg continued. “Why is the state turning its back on the essential care of our seniors and adults with disabilities? With median operating margins already at -8.2%, greater financial burden will collapse the long-term care system –– and ultimately, the entire health care continuum.”

Long-term care providers across the state fear the ramifications of an unfunded mandate and the financial volatility of rebased reimbursement rates, if not corrected. PHCA and its members are asking Governor Shapiro and the legislature to support their mission of caring for the state’s most vulnerable population by fully funding the 2024 staffing ratio increase, and by returning to Harrisburg to correct the issue with the state’s rebased reimbursement rates before providers are forced to make unwanted operational decisions. 

Dyann Roth, president and CEO

Inglis (Philadelphia)

“Year after year of inadequate Medicaid funding for the care we provide to 177 low-income individuals with very complex disabilities in Inglis House –– adults of all ages with quadriplegia and paraplegia and who need intensive medical and supportive services –– placed our operation in dire financial jeopardy. The state’s rate increase in January was a critical step forward that enabled us to sustain the operations of our specialized facility. But now, the extreme swing in our rebased rates as published in the Pennsylvania Bulletin in late June will result in additional operational losses of millions of dollars per year. It feels like a total ‘about-face.’ A legislative change to the fiscal code is necessary to prevent these rates from taking effect –– and that is at serious risk with this impasse.”

Geni Fisher, president 

Fox Subacute (Mechanicsburg, Philadelphia)

“In 2022, we had no option but to close one of our specialized ventilator facilities and relocate our residents across the state in an intensive effort to find them the high level of care needed. That closure was the direct result of insufficient Medicaid reimbursements. Fox Subacute now operates two of the only four specialized ventilator care facilities in Pennsylvania. Our fear with the rebasing of these rates is that soon Pennsylvania will not have any specialized ventilator operators in this state –– all because of a faulty reimbursement structure and an unwillingness to properly fund critical care.”

Steve Tack, president and CEO

Quality Life Services (greater Pittsburgh area)

“We are a Pennsylvania, family-owned and operated provider celebrating 50 years of caring for our neighbors in the 10 communities we serve. But with such a milestone, we are left with little to celebrate as we look ahead to the future because it feels like the state is pulling the carpet out from beneath us –– as if our elected and regulatory officials want to see the collapse of long-term care. Last year, the state made a commitment to providers to fund a new, costly staffing requirement. And now it seems like our elected leaders are back-peddling on their responsibility by not upholding their end of the agreement. We warned of the costs. If the state no longer wants to pay for its mandate –– to invest in the care of our commonwealth’s low-income seniors –– then the mandate should be voided.”

Jim Brogna, vice president

Allied Services (Scranton, Wilkes Barre)

“The costs for care continue to rise along with the demand for care of low-income individuals in our community. We are one of the few long-term care providers expanding access to skilled nursing care in northeast Pennsylvania. Unfunded staffing mandates and increases in staffing costs without additional funding will greatly impact our ability to fulfill care for everyone in need. Our mission has always been to provide quality care to our neighbors, regardless of their socioeconomic status. Unfortunately, many elected officials in the state have not been a partner in that mission. If long-term care funding continues to be placed on the back-burner of state priorities, our communities and those in need of long-term care will suffer the consequences.”