Is There a Right Way to Overhaul Medicaid Reimbursement for SNFs?

The early part of each calendar year is synonymous with state budget battles, where projected Medicaid cuts to Skilled Nursing Facilities always seem to be a hot button issue.

On one hand, Skilled Nursing Providers are already paid far below cost in virtually every State.  On the other hand, individual states want to reduce Medicaid expenditures and nursing homes seem to be in the cross-hairs every year.

Where does it end?

Some States, like Connecticut, have historically reimbursed SNFs based on cost.  The aggregate clinical acuities of the patients, or case-mix, has no bearing on the daily reimbursement to the facility.  Connecticut has seen a significant number of nursing home closures in recent years, and operators are at their wits end.

More than half of the States utilize various case-mix methodologies to compute daily reimbursement.  On the surface, it makes sense to reimburse the facility based on the acuity of the patients (i.e. sicker the patients - > the more resources needed -> the more reimbursement the facility receives).  However, states like New York are objecting to the increases in overall Case Mix Index (CMI) in recent years.  Meanwhile, New York nursing homes face a $60+ per patient per day Medicaid shortfall based on 2017 statistics.

Is there a system out there that would satisfy all the stakeholders by containing costs for the States and reimbursing SNFs fairly for caring for the frail and elderly?  Will the PDPM system help or hurt SNFs when it comes to Medicaid shortfalls?

In an upcoming edition of the Language Fundamentals blog, we will dive deeper into this issue.

In the mean time, please share your thoughts or questions below.