Medicaid payment reform for nursing homes is both necessary and complex. And done well, it should be the result of clear policy objectives, careful consideration, vigorous debate and detailed modeling. On behalf of our 250 members across Florida, we encourage the Senate Appropriations Committee to ask tough questions and thoroughly vet the new nursing home payment system it will consider.
In reforming the payment system, it isn’t enough to implement a system that is cosmetically pleasing for a year or two. We need to look two or three years ahead to ensure that the quality of care in Florida nursing homes, which has improved dramatically over the last 30 years, remains as high as residents and their families deserve it to be.
It’s important to be clear: LeadingAge Florida supports the transition to a Prospective Payment System for nursing homes. We simply can’t support the system that has been proposed. And that’s because we’re looking two or three years ahead.
It is easy, of course, to gloss over the many problems with the plan, and the sophisticated sales effort that is underway in support of it does just that. It simply asserts, for example, that the plan incentivizes quality. And it does, to a certain extent. Though, notably, it does so at a level that is $40 million below the Quality Incentive funding that was proposed in the plan that was shelved by a House committee last month.
It also asserts that the plan enhances accountability. The plan does no such thing. Rather, the plan does not contain any requirement that those homes which benefit from additional tax dollars have to spend a single one of those additional dollars on care. No requirement at all.
Proponents claim that 95 percent of Medicaid funding under the PPS plan would have to be spent on care. That is, flatly, untrue. Look under the hood and you’ll see that the 95 percent figure relates to how prices are calculated. It has nothing whatsoever to do with how those dollars are spent.
The plan also removes $44 million that would be spent on care to instead be spent on property. Although we disagree with this shift in funding away from care, this may or may not be a worthwhile change. But that sort of policy shift, among the many others proposed in the plan, ought to be thoroughly vetted and debated in the sunshine.
In the end, the result is a plan that, if fully funded, would prop up the highest quality nursing homes for up to three years by holding them harmless. Ironically, however, that is precisely the type of short-term thinking that supporters of the plan have argued against.
So, let’s look a bit further out — when the transition funding runs out, presumably after three years, 152 nursing homes with 4 and 5-Star ratings from CMS will lose funding, for a total of $39.7 million in losses among Florida’s highest quality nursing homes. And some of them lose big, with losses as high as 23 percent of their Medicaid funding. Meanwhile, 97 homes with 1 and 2-Star CMS ratings will gain funding, for a total of $29 million in gains among Florida’s lowest quality nursing homes.
Nevertheless, this isn’t about winners and losers. This is about state budgets as an expression of the state’s priorities, and about clearly defining what public policy objective could possibly be served by shifting resources from those that have invested in care to those that haven’t.
It is tempting not to look too far down the road. The longer view is the more difficult one. But payment policy isn’t, and can’t be, an annual exercise. Once in place, this system will establish the state’s approach to our frail elderly for years to come. Indeed, it’s been more than 30 years since the last change this dramatic in Medicaid payment policy.
Certainly, nursing homes will respond. The most significant cost driver in any nursing home is staff. So, it may take a year or two, but those high-quality homes that face 15 and 20 percent losses in Medicaid funding will eliminate jobs, cut back on programs, and reduce spending on true quality-of-life elements such as food and services.
We urge the Legislature to step back from this plan and continue working on it during the interim. The implications for our seniors are too important not to.
Steve Bahmer is president and CEO of LeadingAge Florida