Expenses are rising while Medicaid reimbursement is slow to adjust
Editor’s Note: The Christian Health Care Center of Lynden, a skilled-nursing facility, posted the following article on its website in December and offered it to be printed in the Lynden Tribune.
LYNDEN — Nineteen skilled-nursing and rehabilitation centers have closed in the state of Washington since 2017, according to the Washington Health Care Association. That number, which shows a rapid acceleration from previous years, is expected to increase in years to come.
Care center closures have had significant impacts on families and vulnerable populations. For example:
• The closure of the Seattle Keiro skilled-nursing facility in October 2019 displaced 115 older adults and 280 staff members.
• This month’s closure of the Ida Culver House skilled-nursing facility in Seattle impacts 53 older adults and 147 staff members.
• The only nursing home on Vashon Island, Vashon Community Care Center, recently converted from skilled-nursing to assisted-living. That conversion forced some residents to find placement on the mainland.
Why are skilled nursing centers closing at a time when the Baby Boomer population is in dire need of medical and long-term care? Frankly, it has more to do with economics than the needs of humans.
According to the nursing home industry in Washington state, the closures are a result of capped Medicaid rates and ever-increasing expenses related to delivering care.
Nearly 70 percent of the patients in skilled-nursing facilities rely on the state Medicaid program, yet the state’s reimbursement rates for delivering care are so inadequate that facilities are being forced to close.
Experienced CEOs and skilled-nursing administrators are finding it increasingly difficult to balance expenses with income in the care centers they manage.
For example, in 2016 Washington state voters approved a series of escalating minimum-wage increases. On Jan. 1, 2020, the minimum-wage rate increased again, this time by 12 percent, from $12 an hour to $13.50.
At the same time, Medicaid reimbursement rates — government funding for healthcare services provided to lower-income individuals — have not increased to align with wage increases. The Medicaid reimbursement rates currently being paid to nursing homes were last rebalanced on July 1, 2018, and that rebalance was based on 2016 cost reports.
Not many business models can thrive in situations where expenses increase significantly while income numbers remain flat.
The recent wage increase in Washington state will ripple dramatically through all industries, including skilled-nursing care centers.
At Christian Health Care Center in Lynden, for example, the January 2020 wage increase has already led to higher expenses related to supply vendors and service providers — from lawn care to food service. CHCC also needed to raise wages for experienced patient care staff in 2019 to help with recruitment and retention in a highly competitive job market.
Meanwhile, Medicaid rates remain capped.
Industry advocates, such as LeadingAge Washington, are doing what they can to bring about change in Washington state. They are proposing changes to legislation that would require annual “rebasing” of the direct and indirect costs of delivering care, an action that could help stabilize Washington’s skilled-nursing industry in 2020.
“Pressures in the skilled-nursing industry are at a critical level,” said Patrick O’Neill, CEO of Christian Health Care Center. “A coalition of stakeholders has formed to raise awareness of this issue. We really need the public’s help to advocate for eldercare.”
Anyone who is involved in this industry — staff, residents, volunteers, family members, vendors, concerned community members — can engage in this process by encouraging lawmakers to fix the Medicaid reimbursement rate problem.
People interested in connecting and lobbying their legislators should go to: https://www.wahealthactionnetwork.com/take-action. An online form has been created to make it easy to contact Washington state legislators who have the power to make a change. Citizens can ask their elected officials to address this issue via this online form.
For now, O’Neill says that the Lynden skilled-nursing care center that he oversees will continue doing what it has always done to the best of its ability, shifting and adjusting to the current market as needed.
“The board of directors and leadership team at our nonprofit remain fiercely dedicated to the stewardship of Christian Health Care Center,” he said. “Every day, we work hard to be fiscally responsive so CHCC can serve our community, as it has since 1956, for decades to come.”
At least one bill related to skilled-nursing facility viability was prefiled for the current session of the Washington State Legislature. SB 6396 would require Medicaid rates for nursing homes to be tied to inflation and recalculated every year.
Another piece of legislation requested by Washington’s Department of Social and Health Services has an estimated cost of $29 million in the current budget. About half of that would come from the state and half from federal funds, according to Northwest News Network.
The DSHS bill would also have nursing home rates be rebased annually, but it would include a one-time inflationary adjustment rather than an automatic one.