Quality Assurance Assessment
Quality Assurance Assessment
Contact Brendon Polt, JD, MBA
Government Relations Director
Nebraska Health Care Association
BrendonP@nehca.org, 402-435-3551 (office), 402-770-8445 (mobile)
On April 26, 2011, LB600 was returned to the Legislature by Governor Heineman without approval (vetoed). The sponsoring Senator, Kathy Campbell, HHS Committee Chairwoman, motioned to override the veto which was taken up for debate on April 28, 2011. The override motion was adopted on a vote of 44 “aye”, 0 “nay”, 3 “present but not voting” and 2 “excused.” The override vote tally is posted here.
LB 600 (“slip law copy”) was “passed notwithstanding the objections of the Governor” on April 28, 2011. The following senators cosigned the legislation between introduction and adoption:
Galen Hadley, Kearney
Tom Carlson, Holdrege
Tom Hansen, North Platte
Mike Gloor, Grand Island
Bob Krist, Omaha
Norm Wallman, Cortland
Russ Karpisek, Wilber
Tanya Cook, Omaha
Colby Coash, Lincoln
Charlie Janssen, Fremont
John Harms, Scottsbluff
Dave Pankonin, Louisville
Kate Sullivan, Cedar Rapids
Bill Avery, Lincoln
Burke Harr, Omaha
Annette Dubas, Fullerton
One page summary of Nursing Facility Quality Assurance Assessment Proposal
Presentation on the Need for a Quality Assurance Assessment
Background
Over the past few years, decline in the economy has resulted in state tax revenue shortfalls and strain on funds available for reimbursement to nursing facilities for services to residents covered by Medicaid. The result has been a growing gap between the cost of services and reimbursement levels. The current projected average underfunding is $27.48 per patient day for 2011, which has tripled in the past five years. Due to this trend, nursing facilities in Nebraska are experiencing major losses. Some facilities have closed and others have turned away Medicaid residents or passed on the increased cost to the private pay residents.
As a way to generate additional dollars for rate payments, 46 states have imposed assessments on various Medicaid providers, including nursing facilities. Providers pay an assessment to the State that is reimbursed to facilities; however, when it is reimbursed, a far greater amount is received from the federal government than was initially assessed. Payments to nursing facilities are financed approximately 40 percent from the State General Fund and 60 percent from federal funds, i.e., for every $1 paid by the State, the State receives $1.50 from the federal government. Thus, an increase in state payments will increase federal funding by a corollary 150 percent. Thus, in aggregate, for every $1 assessed to facilities, they are reimbursed $2.50 (their initial $1, plus an additional $1.50).
As background, in 2009, the Nebraska Department of Health and Human Services (DHHS) hired a consultant to study Nebraska’s nursing facility payment system and recommend improvements. Ultimately, the consultant recommended imposition of such a provider assessment. DHHS formed a workgroup with broad representation from Nebraska’s facilities to evaluate and recommend implementation or not of the consultant’s proposals. At that time, with appropriation growth at 2.5 percent, the workgroup voted to not move forward with an assessment program but to keep it under consideration in the event the bottom fell out of funding for future appropriation increase.
It seems as though the bottom has fallen out. In September 2010, DHHS submitted its budget request calling for a 5 to 7.9 percent across the board cut in Medicaid rates. It now appears highly likely that providers will sustain at least a five percent cut when the legislature adopts a budget in 2011. In light of this dismal outlook, the NHCA Board of Directors and Medicaid Rate Committee, working in tandem with LeadingAge Nebraska (formerly Nebraska Association of Homes and Services for the Aging), have voted to move forward with a provider assessment recognizing the critical need to bring in additional funding.
The drawback of this type of funding program is that, under federal regulations (42 CFR 433.68), the assessment is made against days of service to Medicaid and private-pay residents (Medicare days may be excluded). However, it is reimbursed as enhanced rates and supplements to Medicaid days only. This advantages facilities with higher percentages of Medicaid residents over those with low or none. To determine how provider assessment would impact Nebraska facilities, NHCA hired the American Health Care Association’s Medicaid consultant and nationally renowned expert, Joseph Lubarsky, CPA, of Eljay LLC in Louisville, Ky. By selecting waivers and exemptions permitted under federal regulations, Lubarsky’s modeling demonstrates that Nebraska could implement an assessment with fewer than 10 facilities out of 224 that pay more into the system than are reimbursed. All but four of these facilities are able to offset losses with gains in other centers within the same organization. All organizations that incur a loss have been contacted and expressed recognition that additional funding is needed for adequate reimbursement.
Lubarsky designed an initial model that would generate approximately $19.7M in new federal funding, bringing under-reimbursement to a more manageable level. It assesses $3.50 against Medicaid and private-pay days for most facilities and a smaller amount or no assessment for small sub-classes of waivered facilities. The model is designed to restore approximately 4 percent of the proposed 5 percent across-the-board Medicaid provider rate cut.
The intent is to prevent the devastating outcomes that will likely result under the proposed cuts such as insufficient wherewithal to maintain quality services, unavailability of care in rural areas, and a resulting loss of jobs and economic activity. Furthermore, the burden to private pay residents is reduced immensely under an assessment as compared to the burden on private payers to offset huge Medicaid losses without new federal funding.
The assessment’s key elements and limits are:
- The assessments must be “broad based”, meaning imposed on all facilities at a uniform rate unless the State applies to CMS for a waiver of the requirement;
- The enacting legislation cannot include any language that holds certain providers harmless unless the State applies to CMS for a waiver of the requirement;
- The assessment is based on nursing facility total resident days and Medicaid censes although Medicare days may be excluded;
- The assessment collected is paid into a separate fund to leverage federal dollars prior to being returned to the facilities as an enhanced payment; and
- Dollars in the fund should be used to enhance existing and future rates rather than replace or offset existing state funds paid to nursing facilities for services provided under the Medicaid program.
To our knowledge, there is no active opposition to this proposal. We believe if we come forth unified with a solution to such drastic under-reimbursement that does not require additional state tax funding, the legislature will be supportive. Therefore, communicating our unified support will be critical as the 2011 legislature ensues.
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