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While providers largely agreed with Monday’s new federal call for states to tie increased Medicaid funding to accountability, they remained concerned about what that could mean for nursing homes in states whose daily reimbursement rates have fallen far below the cost of providing quality care.

An informational bulletin issued by the Centers for Medicare & Medicaid Services early Monday urged states to use their existing Medicaid authority to help drive better health outcomes and improve staff pay, training and retention efforts. The bulletin, however, did not impart any new requirements on states or providers.

“If past actions are any indication of future initiatives, providers in most states are going to continue to struggle to get additional Medicaid funding,” a LeadingAge spokeswoman told McKnight’s Long-Term Care News Monday afternoon. “Our position on staffing mandates is unchanged: If CMS is going to impose new staffing requirements on nursing home providers, and those new requirements result in additional costs, then CMS must do more than encourage state action. 

CMS urged states to tie Medicaid payments to quality measures that will improve resident care and safety and ensure nursing homes are adequately resourced and staffed. The bulletin directs states “as appropriate, to provide adequate, performance-driven nursing facility rates to ultimately achieve better health care outcomes and address longstanding inequities for Medicaid beneficiaries residing in nursing facilities.”

“In the Medicaid program, states have broad flexibility to design their provider payment structures to incentivize providers for implementing or performing highly on the types of initiatives listed above,” wrote Daniel Tsai, CMS deputy administrator and director of CMCS.

Immediate help available

He noted in the bulletin that states can implement a number of initiatives “immediately” through a Medicaid state plan, a waiver, or a demonstration process. CMS highlighted efforts in California and Illinois specifically, which have acted to tie state Medicaid payments to quality outcomes. CMS encouraged other states to use any federal or state data at their disposal to improve and better target oversight of facilities.

For its part, the American Health Care Association said it would continue working with state and federal policymakers to develop such “quality-focused reimbursement programs.”

“We have long backed reimbursement programs that support and incentivize long-term care providers to further enhance the quality of care delivered,” Holly Harmon, senior vice president of quality, regulatory and clinical services at AHCA/NCAL said Monday. “First and foremost, Medicaid needs to fully fund nursing homes for the actual cost it takes to care for residents. Too many states fail to meet this baseline, and as a result, nursing homes are struggling to compete for workers and keep their doors open.”

On Monday, CMS pointed out that a number of states use the CMS Nursing Home Five-Star Quality Rating System as part of their calculation of bonus payments to nursing facilities. States also may develop incentives to encourage provider participation in Medicaid-specific quality improvement activities based on state-developed program goals. 

The agency noted that it has already approved staffing incentives in various state Medicaid programs, including Connecticut, which gives a 2% rate increase to be used for increases to employee wages, salaries and benefits.

It also highlighted Rhode Island’s recently increased nursing facility rates “to support new minimum staffing and wage requirements.” Under its terms, 80% of any base rate increase paid to a nursing facility must be dedicated to increased salary or hourly wage increases, benefits, and other compensation for all eligible direct-care workers.

Medicaid tide turning?

Providers have received key, and in some cases, historic boosts to their state payments this year. The 2022-2023 Pennsylvania budget includes a Medicaid raise of $35 per resident per day for nursing homes, when federal matching dollars were included.

“The tone [is] changing in a lot of states when it comes to Medicaid underfunding,” Sabra Healthcare CEO Rick Matros said during a recent earnings call. He noted that FMAP extensions and year-over-year increases in regular Medicaid rates were wide enough to provide a bump to 60% of Sabra’s SNF portfolio. He expected growing access issues would continue to put pressure on state lawmakers to fix long-term care while their budgets are in good shape.

But some states, notably Texas, have gone many years without a non-COVID-related increase.

Monday’s bulletin also said CMS would continue “to encourage states to ‘rebalance’ their LTSS systems to achieve a more equitable and person-centered balance between the share of spending and use of services and supports delivered in home and community-based settings relative to institutional care.”

In some states where operators are desperate for Medicaid increases as their peers close the doors, that encouragement appears to be pitting different aging services providers against one another.

Montana has lost 10% of its skilled nursing beds in a six-month period this year, but Rose Hughes, executive director of the Montana Health Care Association, said the state’s governor isn’t interested in increasing support for facilities or their workforce.

Gov. Greg Gianforte (R) and the state’s Department of Public Health and Human Services has told nursing homes that a failed business model and lack of innovation are to blame for facility closures, the Daily Montanan reported. The Gianforte administration also has advocated for more in-home healthcare and assisted living facilities to fill the gaps left by closed nursing homes.

“The Governor’s office and state Medicaid agency have shown little or no interest in helping in the short term,” Hughes told McKnight’s earlier this month.