Published in the Pawtucket Times on January 21, 2002

Like clockwork each year, Robert Hawkins, the state’s best-known consumer advocate for quality nursing home care and the state’s nursing facility industry, came to Smith Hill, calling on the General Assembly to adequately fund long-term care.

While representing different constituencies, both Hawkins and the nursing home industry were on the same page regarding this policy issue. Both groups strongly urged the Rhode Island General Assembly to adequately fund the state’s Medicaid program. For its Medicaid dollars, the Rhode Island Department of Human Services got: 24-hour nursing care; three meals per day with dietary supplements; other care services like grooming, personal care, bathing and assistance with eating; medical supplies, such as beds and wheelchairs; social services and activities.

Some years were better than others, especially last year. Responding to a serious statewide nursing assistant shortage, Rhode Island lawmakers gave an additional $9 million to pay for nursing facility direct care staff. However, the Rhode Island Health Care Association said that those funds did not cover the spiraling costs of operating a facility.

Liability insurance has doubled, energy costs have risen by approximately 25 percent and Providence-based facilities have been hit with tax increases with some facilities being assessed close to $ 100,000, noted the state’s largest nursing facility trade group.

Now, a recently released national study supports nursing facility and consumer concerns that the Rhode Island Medicaid program has not paid the “real” cost of providing care to Medicaid patients.

According to an independent analysis of the nation’s Medicaid pr.0ogram by the accounting firm of BDO Seidman, the Ocean State’s Medicaid program underfunds its nursing facility industry by more than $25 million annually or about $10.04 per patient day.

According to the national study, most states fail to adequately account for escalating Medicaid costs. They do this by using cost inflators that are not reflective of actual nursing facility cost increases and by using extremely outdated data.

For instance, Rhode Island uses data using 1991 costs in setting rates for most nursing facilities.

“The most disturbing finding of this study is that the state is reimbursing senior’s long-term care for substantially less than the acknowledge cost of that care,” says Alfred Santos, executive vice president of the Rhode Island Health Care Association (RIHCA). “Medicaid pays just slightly more than $4 per hour per patient, less than most people pay a teenage babysitter,” Santos charges.

Adds Hugh Hall, administrator of the Cherry Hill Manor, the cost of care in his facility is higher than most because of the acuity of his residents. Being under paid by Medicaid by $40 dollars per day significantly impacts the operation of his Johnston-based 172-bed skilled nursing facility, Hall says, noting that it forces the facility to look for other sources of payment to compensate for the state’s shortfall.

Hall called for a national commitment to adequately pay for care provided to the elderly and the younger subacute care population coming in nursing facilities.

“In Rhode Island, we’re working to educate the General Assembly so they understand the shortfall of the current Medicaid system, says Hall, specifically noting that the negative impact of not keeping up with annual cost changes affecting nursing facilities and not recognizing more immediately the capital costs required to maintaining a physical plant.

Hawkins, executive director of the Alliance for Better Long-Term Care and the state’s ombudsman brings the Medicaid payment issue down to a personal level: “How would any person like to have their salary level based on 1991 costs?”

“As a society, all of us are responsible for the care being provided to nursing facility residents. IF we don’t provide the best of care, we are partially responsible for that care not being provided,” says Hawkins.

“While we are demanding the highest quality of care to be delivered in Rhode Island facilities, we are not ensuring that the facility is being paid adequately to reach the quality that we are demanding from them,” adds Hawkins.

“While there may be areas where a facility can save money, it should certainly not come from a facility’s budget to ensure appropriate staffing levels or to pay for qualified nursing staff,” notes Hawkins.

“Nursing facilities are between a rock and a hard shell because they cannot recruit staff because of low wages that result from the current Medicaid reimbursement system, and they cannot hire additional staff either,” says Hawkins.

Lt. Governor Charles J. Fogarty, who heads the state’s Long-Term Care Coordinating Council, states that the General Assembly is now working to address the concerns of consumers and providers over the state’s inadequate Medicaid reimbursement policy.

Fogarty stated that he serves on a work group, administered by the state’s Department of Human Services with members from the House and Senate, to review the state’s current reimbursement Principles for Nursing Homes and other components of the long-term care system. The state-level work group has been meeting for several months and came into existence as a result of lawmakers confronting the severe certified nursing assistance shortage in nursing facilities, the Lt. Governor said.

Fogarty states the work group is in the process of considering the hiring of a consultant to ultimately shape the state reimbursement policy on Medicaid.

“This issue will not go away,” he said, noting the state’s growing aging population. “Nursing facility residents are now sicker and require more intensive care than they did 14 or 20 years ago, noted Fogarty.

Jane Haywood, director of the state’s Department of Human Services, says that her agency recognizes there is a myriad of issues relating to nursing facilities and the long-term care continuum the state must address. The legislatively mandated workgroup is expected to develop proposals of reforming the state’s Medicaid system and entire long-term care system by spring, Hayward adds.

When something is broke fix it.

No Rhode Island company can not survive for long with their revenues not covering their operating costs.

Now it is time for the state to follow this longtime sound business principle when it revamps its ailing Medicaid program. With adequate state funding, Rhode Island regulators can rightfully better demand quality from nursing facilities. With more money in their coffers, facilities had better produce that quality of care, too.

The message should be clear to the nursing home industry – it’s now time to get the gang for the buck.