Correction: In a previous version of this story, there was an error in the quote: “That goes along with the principles set out in the beginning of not cutting rates and not cutting services.” Ewert said. "Cutting" is the correct verb in both cases.
Warner Harrison, co-owner of LakePoint nursing and assisted living residences, thinks it’s anybody’s guess as to how nursing homes will be affected by the changes being made to the state’s Medicaid system, known as KanCare, but he’s trying to stay optimistic.
“The question is: Are dollars going to be No. 1?” Harrison said. “My contingent is we could lower the cost, but work with state agencies. Managed care is going to make the money.”
KanCare is the state’s latest plan to privatize Medicaid, the program that subsidizes health care costs for the poor and disabled.
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About 10,000 nursing home residents in Kansas receive care through Medicaid, said Joe Ewert, commissioner of survey certification and credentialing for the Kansas Department of Aging and Disability Services.
The state is turning over the management of the Medicaid system to three companies, called managed care organizations. It plans to implement the system as of Jan. 1, 2013, pending federal approval.
The governor’s office estimates the new program will save the state more than $1 billion over the next five years. The current program costs $2.9 billion per year to operate.
“The cost of Medicaid is an issue for all the states right now,” Ewert said.
Providers who receive Medicaid reimbursements – including nursing homes – say they don’t know how the new system will work.
Although the fee-for-service reimbursement rate that has been used by Kansas remains in place for the initial contracts with the managed care companies, rates for subsequent years after contracts are up remain unknown, providers say.
Matthew Bogner, Kansas Masonic Home CEO, said among the concerns for nursing home is whether Medicaid reimbursement rates will keep pace with rising health care costs.
“I know it’s a relief to some providers that reimbursements rates wouldn’t be cut, but at the same time, it’s equally troubling that rates might not increase over time,” Bogner said. “Only time will tell.”
At the Kansas Masonic Home’s health care center, about 60 percent of health care residents are Medicaid recipients.
If rates remain flat for several years, Bogner speculates that it wouldn’t take long for nursing homes – nonprofit and for-profit – to look at cutting expenses. The largest expense, by far, he said, would be staffing, so nursing homes may have to look at reducing the number of nurses and support staff.
Bogner said many nonprofits already record a loss for the care of Medicaid recipients, but, “We will continue to try to advocate for residents and to receive appropriate levels of reimbursements so we can provide appropriate quality of care.”
The managed care companies that contracted with the states will be required to reimburse nursing homes 100 percent of the fee-for-service rates set by the state, Ewert said, so the companies can’t save money by paying less.
“That goes along with the principles set out in the beginning of not cutting rates and not cutting services,” Ewert said. “As always, the state has a rate methodology that factors in cost and inflation, and we plan to maintain that methodology and that is not in the hands of the health plans.”
The state currently reimburses nursing homes an average of $150 per Medicaid recipient per day, but every nursing home is different, Ewert said.
Although he did not know how that dollar amount compares with reimbursement rates in other states, he said that Kansas reimburses 95 percent of allowable costs while the national average is about 90 percent of allowable costs.
Another change under KanCare will be that each Medicaid recipient in a nursing home will be assigned to a care coordinator.
The care coordinators, employed by the MCOs, will monitor services and changes, such as transitions to nursing homes and hospitals.
Kansas has a fairly high nursing home utilization rate for those older than 65 compared to other states, Ewert said.
To him, the biggest impact KanCare will have on nursing homes in the long term is its potential to lower the number of residents over time through efforts to “keep people healthier and in their homes longer.”
Jerry Delashaw, senior vice president of project development and compliance for Presbyterian Manors of Mid-America, said he doesn’t anticipate any problems with the new system.
Because both the costs of Medicaid and the numbers of recipients have been rising over the years, concerns about how to pay for care also have been growing, Delashaw said.
“So I think the state is really attempting to deal with a problem, and it’s a complicated one.”
About 15 percent of residents at Presbyterian Manors’ Wichita location receive Medicaid, Delashaw said.
Presbyterian Manors of Mid-America has completed two of the three managed care contracts, and Delashaw said it hoped to finalize the third contract soon.
“I would have appreciated a little more time, but it looks like we’re going to get there,” he said.
He thinks the biggest challenges will be logistical and working with three companies instead of just the state.
“Bottom line: There are a lot of unknowns,” Harrison said. “Our industry is like a big boat. It takes time to figure out the move that’s going on.”