Questioning the Effect of Recent Wage Changes on NJ Nursing Homes

Though Murphy administration has upped reimbursement rates for personal care services, state lawmakers are concerned about a lingering gap in funding
Credit: BLS
Medicaid reimbursement rates have been growing, including for PCAs.

New Jersey has recently taken steps to raise the rate Medicaid pays for personal care services and lawmakers want to know what that means for the state’s nursing homes, which they said lose more than $400 million caring for Medicaid patients each year.

The state Senate unanimously approved a bipartisan measure Monday to establish a nine-member commission to study how increases to these reimbursement rates have impacted the 333 Garden State nursing homes that care for Medicaid patients.

The legislation, which cleared the Senate health committee in late January, is focused on payment rates to nursing homes for personal care assistants, or PCAs, who are trained to help elderly or disabled residents to bathe, dress and with other nonclinical daily tasks, both at long-term care facilities and in their homes.

Reimbursements for these professionals have started to edge up under Gov. Phil Murphy, who has added more than $30 million to PCA rates in recent years, state officials note. Under the current budget, New Jersey expects to invest more than $1.8 billion through Medicaid — a mix of state and federal dollars — in payments to nursing homes for PCA care and other services.

But this increase in spending alone doesn’t balance the budget for nursing homes, which lost almost $40 a day in 2019 for each Medicaid patient they served — and more than $400 million annually — according to the Health Care Association of New Jersey, which represents long-term care facilities. There are nearly 28,500 Medicaid members in nursing homes here, making up roughly 70% of the residents overall, the association said.

Impact on vulnerable residents

Sen. Robert Singer (R-Ocean), who sponsored the bill along with Sen. Patrick Diegnan (D-Middlesex), told the health committee this funding gap convinced him it was time for a look at the impact of PCA pay on the care nursing homes provide for the state’s most vulnerable residents. A companion version by Assemblywoman Valerie Vainieri Huttle (D-Bergen) has yet to have a hearing.

“We need to understand what the rate changes mean to the important services provided at these facilities,” Singer, a longtime health committee member, said Monday. “Did they have an effect on staffing, the cost of care for residents, or the financial health of nursing homes? It’s imperative to discover if there has been an impact on patient care, and this bill will help us get the answers.”

Leading Age New Jersey, a nonprofit advocacy organization for senior services, backed the measure at the committee hearing last month. HCANJ is also supportive of the bill, but would like to see a study that examines the impact of all Medicaid reimbursement rates on assisted living facilities, home care agencies and others that care for vulnerable residents — not just for PCAs at nursing homes.

“Everyone who cares for others deserves to have these rates studied and a funding increase,” said John Dolan, president and CEO of HCANJ. The association has worked for several years with Assemblyman John Burzichelli (D-Gloucester) on a separate bill that would require the state Department of Human Services, which oversees Medicaid, to review its full reimbursement schedule.

While funding gaps remain, Dolan also praised DHS Commissioner Carole Johnson for her efforts to help long-term providers cover the costs of the care they provide. “I appreciate the more academic and practical approach to our costs,” he said.

Medicaid reimbursement rates have been raised in a growing number of areas in recent years, including for PCAs, but not by as much as some lawmakers and health care advocates have wanted. In addition to other increases, Murphy signed a law last summer that will increase PCA reimbursements from more than $16 an hour to $18 by 2025; lawmakers had sought to boost it to $20 hourly, but Murphy said they had not identified the necessary funding to cover the larger increase.

PCAs take home $10 to $12 an hour

Regardless of what Medicaid reimburses nursing homes or other facilities for their work, PCAs only take home a portion of the rate — generally between $10 and $12 hourly; these workers are employed by agencies that deduct a portion of this payment to cover various costs. Advocates say the low pay, licensing requirements and taxing work, both physically and mentally, lead to high turnover and persistent staff shortages in the profession.

PCAs provide critical daily services at nursing homes, but they are just one piece of the larger staffing puzzle; HCANJ said the industry also needs more nurses and certified nurse assistants. In 2019, Garden State facilities collected an average of $222 daily for housing, feeding and providing personal care, social support and limited medical services to Medicaid patients — services that actually cost $262 daily, according to the association.

The Singer/Diegnan bill (S5-1) would create a nine-member commission to review these issues with representatives of both DHS and the Department of Health, plus seven public members appointed by the governor and Democratic and Republican legislative leaders. Five of the public members would need expertise in nursing homes; one would have to understand Medicaid and another would need to know public budgeting.

If passed by the Assembly and signed by the governor, the legislation would require state officials to appoint the commission members as soon as possible so the panel could get to work quickly. DHS would provide staff to assist the group.

The group would then have a year to research how the PCA rate increase has impacted staffing, employee retention, operations, financial health and related issues — including any nursing home closures — and report its findings to the Legislature and governor. The commission would be disbanded three months after delivering its report.

We’re in this together
For a better-informed future. Support our nonprofit newsroom.
Donate to NJ Spotlight