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Lawmakers Urge Review of Medicaid Rates for Nursing Home Care in NJ

Providers say they’re losing more than $400 million a year, struggling to contain costs

Nursing home
Credit: Creative Commons

With New Jersey nursing homes now losing some $416 million annually on the care they provide for Medicaid patients, lawmakers are calling on state officials to review — and likely revise — the existing payment system for these services.

The Assembly Human Services Committee unanimously approved a bill, introduced in April, that would require the state Department of Human Services to conduct a detailed study of the Medicaid reimbursement schedule, assess whether it is adequate given today’s costs of care, and recommend changes.

According to the Health Care Association of New Jersey, which represents the 331 Garden State nursing homes that serve Medicaid residents, these facilities lose nearly $50 a day on caring for each client, after they pay for shelter, food, personal care, social services and more. While expenses continue to escalate, the Medicaid reimbursement rates haven’t been updated since 2011, advocates said.

“It’s simply not enough to keep pace with our costs,” John Indyk, vice president of the association, told the committee, “and things are trending upward. I think we need this important rate study.”

Annual cost of care can exceed $100,000

The measure is one of several bills related to nursing home and long-term care that lawmakers have considered recently. Last month, the same Assembly committee advanced a measure to boost the number of aides hired at nursing homes and the Senate is reviewing a proposal to increase the pay for personal care assistants, direct-care workers that assist individuals at home or in residential facilities.

More than 28,000 nursing home beds are occupied by Medicaid residents, according to HCANJ, and these individuals make up nearly six out of 10 of the New Jerseyans who depend on this type of long-term care. The average age of nursing home residents in the Garden State is 85.

Since long-term nursing care is expensive — it can exceed $100,000 annually in New Jersey — and not covered by Medicare, many families are forced to “spend down” a loved one’s assets to qualify them for Medicaid, which does cover nursing care. In the Garden State, seniors can qualify for long-term care under Medicaid if they earn up to 300 percent of the federal poverty limit, or around $36,000 annually for an individual.

Last month, U.S. Rep. Frank Pallone, (D-NJ) introduced federal legislation to allow Medicare to pay for nursing homes and other long-term care, as well as support services designed to help seniors remain in their home and avoid or postpone a move to a costlier residential institution. Seven out of 10 Americans will need long-term care at some point in their lives, Pallone said.

Trying to help people stay at home

New Jersey has made strides to expand options for home-based care, including receiving federal Medicaid waivers to allow more flexibility in how these dollars are used to help people stay in their homes. Tens of thousands of elderly and disabled residents now receive support services through this program.

Long-term care patients — including those in nursing facilities and those at home — represent close to 2 percent of the Medicaid population. But, according to state data from 2015, the most recent available, their bills account for 21 percent of the program’s cost, more than $2.3 billion that year. Nursing homes were the most expensive aspect of this care, with an average cost to Medicaid of more than $62,000 a year per person at that time.

Indyk, with the Health Care Association, said nursing homes expend an average of $256 a day to provide for these residents, but can recover only $208 from the Medicaid program; that amounts to less than $8.70 per hour for all the costs that accompany a resident’s housing, feeding and care. The vast majority of these reimbursements are handled by managed-care organizations, which oversee 95 percent of Medicaid claims in New Jersey, and whose rates are governed by state regulations, negotiations and data analysis.

The legislation (A-3846), sponsored by Assemblyman John Burzichelli (D-Gloucester), calls for the DHS to review the current system and the costs of care once the bill takes effect in six months. This analysis must consider issues with Medicaid eligibility for residents — delays are common and can result in reimbursement gaps — as well as the state’s authorization process for Medicaid status and other administrative issues.

A year later the DHS would be required to recommend changes in a public report. Among other things, officials must consider a higher per-diem rate for all Medicaid residents; a model that takes account of the number of private-paying residents; a minimum rate based on what is negotiated by the managed-care organizations; regional rate variations, and a built-in adjustment for inflation.

Tom Hester, communications director for the DHS, declined to address the bill, but noted the importance of these services. “The Department does not comment on pending legislation, but ensuring quality nursing homes and the best possible care for older adults is always a top Department of Human Services priority,” he said.

A Senate version of the bill sponsored by Sens. Troy Singleton (D-Burlington) and Patrick Diegnan (D-Middlesex), has not yet had a hearing. The New Jersey Hospital Association, which also represents long-term care facilities, also backed the Assembly bill.

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