New National Study Shows Devastating Medicaid Underfunding in Ohio

New National Study Shows Devastating Medicaid Underfunding in Ohio

Skilled nursing facilities were underfunded by $262 Million in 2009; 2011 rate cuts worsen this situation

COLUMBUS, Ohio, Dec. 23, 2011 /PRNewswire-USNewswire/ -- As skilled nursing facility (SNF) providers across Ohio face 2012, a new report reveals the depth of their financial challenges. Medicaid, the health program for low-income seniors and individuals with disabilities, underfunded Ohio SNFs by $262 million, or $14.31 per patient per day, in 2009. The report projected those figures to rise to $330 million and $18.23 per patient per day in 2011, but those calculations were done for Fiscal Year 2011, which did not take into account the Medicaid rate cut of nearly $10 per day imposed on Ohio SNFs by the state budget bill, House Bill 153. This cut took effect for Fiscal Year 2012, which began July 1, 2011.

 "The widening gap between the cost of providing the quality skilled nursing care that Ohio's seniors deserve and what Medicaid actually pays the providers who deliver that care puts our most vulnerable seniors at risk," warned Peter Van Runkle, Executive Director of the Ohio Health Care Association. "This report underscores the need for policymakers to consider the impact additional cuts to either Medicare and Medicaid funding for skilled nursing facility care will have on Ohio's seniors and people with disabilities."

Released by the American Health Care Association (AHCA), A Report on Shortfalls in Medicaid Funding for Nursing Home Care, compiled by Eljay, LLC, a national research firm, reveals a bleak outlook for both Ohio and the nation. Nationally, SNF care was underfunded by $6.3 billion in 2011, or $19.55 per patient per day. In addition, the report finds that at least 60 percent of states either reduced on froze Medicaid rates for Fiscal Year 2012.

"Cutting back during tough economic times isn't easy, especially when state underfunding leaves care providers to pick up nearly $20 each day for those who rely on Medicaid for the skilled nursing facility care they need," said Governor Mark Parkinson, President & CEO of AHCA. "This consistent underfunding of Medicaid only harms those most at-risk who require care, jeopardizing their access to skilled nursing facility services."

The situation is particularly difficult in Ohio. "Medicaid was not covering our costs before, but the problem got that much worse with the cuts we sustained in July," said Van Runkle. "We recently conducted a survey that showed the 385 responding facilities eliminated more than 3,000 jobs to cope with the cuts in both Medicare and Medicaid, but even though we have lowered costs, the gap between costs and payments has to be growing." He added that because the job loss survey only covered about 40% of all SNFs, the true number of lost jobs probably is much higher.

Key findings in the Eljay LLC Medicaid Shortfalls report include:

  • The average shortfall in Medicaid reimbursement for SNF care was projected to be $6.3 billion for 2011, or $19.55 per Medicaid patient day.
  • For Ohio, the Fiscal Year 2011 Medicaid shortfall was projected to be $330 million, or $18.23 per Medicaid patient, per day.
  • Medicare cross-subsidization of Medicaid continues to serve an important function in sustaining SNF care. In 2009, the combined reimbursements from both Medicare and Medicaid resulted in razor-thin operating margins for skilled nursing centers.
  • With Medicare rate reductions of over 12% imposed for Federal Fiscal Year 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 – dropping to negative 2.7 percent.
  • Medicaid reimburses about 90 cents for every dollar of allowable cost incurred in providing long-term care for a Medicaid patient in 2011.

"Unprecedented state budget deficits and the expiration of federal stimulus funds as of July 1, 2011, have contributed to the second lowest percentage of cost coverage in the ten years that this annual report has been compiled," remarked Joseph Lubarsky, President of Eljay, LLC, and author of the report.

The Ohio Health Care Association is a non-profit association of more than 700 skilled nursing facilities, assisted living communities, and providers serving people with intellectual and developmental disabilities, representing over 50,000 individuals. Many OHCA members also provide a variety of home and community-based services. OHCA is the largest long-term care association in the state, and the only chartered Ohio affiliate of the American Health Care Association, representing more than 12,000 long-term care facilities nationwide.

SOURCE Ohio Health Care Association