Lawmaker urges increase in Medicaid payments to Nebraska nursing homes

March 27, 2019

LINCOLN — Nebraska nursing homes are being put in danger by a growing gap between Medicaid payment rates and operating costs, a key state lawmaker said Monday.

State Sen. John Stinner of Gering, the Appropriations Committee chairman, told fellow committee members that the situation has reached a crisis level.

“We as senators are responsible for the safety and well-being of the State of Nebraska. Let’s live up to it,” he said. “If we don’t increase rates, we’re going to fail.”

Stinner argued in support of Legislative Bill 403, his proposal to change how Medicaid nursing home rates are calculated. With an amendment he offered Monday, the bill would increase funding for those rates by an estimated $21.3 million a year. The state share of that increase would be $9.6 million.

Nursing home representatives backed the bill, saying the payment gap is a critical factor in homes’ struggles to survive.

Compounding the payment gap, there are fewer private-pay residents, and Nebraska’s tight labor market has driven up costs. Occupancy rates have fallen, in part because of a push toward less costly options, including in-home care.

In 2014, Nebraska Medicaid paid homes about $25 less per day than their costs, according to information compiled by the American Health Care Association. By 2017, the gap had increased to about $36 — or 17.6 percent of costs.

Kari Wockenfuss, administrator of the Louisville Care Community, said her facility does not limit the number of Medicaid residents, even though Medicaid lowered its payment rates for the facility by $2 for the current year, compared with last year.

She said that 76 percent of residents are on Medicaid and that the facility has lost $169,000 since Oct. 1.

But state Medicaid officials opposed the bill, saying they are working on a new method for calculating nursing home rates. They said LB 403 was unnecessary and would just tweak the calculation method, when a bigger change is needed.

Jeremy Brunssen, a deputy director of Medicaid and long-term care services, said he understands that operating conditions for nursing homes are “extremely difficult.”

“I don’t see this as us-versus-them issue,” he said. “This is an opportunity for us to address the current methodology.”

Brunssen said a first step in that process was unveiled earlier this month.

The state is looking at a methodology that sets a base rate for all homes, instead of the current method in which some homes get paid as much as $80 more than others. The state also wants to include incentives for quality of care, along with factors for rural homes and homes with larger proportions of Medicaid residents.

Thomas “Rocky” Thompson, another deputy Medicaid director, said the goal is to implement the new rate methodology by July 1, 2020.

Gov. Pete Ricketts’ proposed budget included $10.6 million next year to increase nursing home payment rates, with another $10.8 million the following year. The state share of that increase would be $4.8 million next year and $4.9 million the following year.