Medicaid Outlook Bleak

According to an annual study conducted by Eljay LLC, on behalf of the American Health Care Association, unprecedented state budget deficits will result in historically low Medicaid reimbursements to long-term care facilities.

Unreimbursed funds from Medicaid to nursing homes is projected to exceed $6.3 billion in 2011, an average per-patient shortfall of $19.55 per day, a jump from a $16.54 per day loss in 2009.

"The combined shortfall of both Medicare and Medicaid is projected to exceed $2 billion, marking an end to the current reliance on Medicare cross-subsidization of Medicaid shortfalls and the beginning of greater uncertainty," the report states.

The Alliance for Quality Nursing Home Care's President, Alan G. Rosenbloom, said that he hopes members of the Medicare Payment Advisory Commission (MedPAC) keep a historical perspective when issuing recommendations. Quoting from McKnights, "This could be a replay of the early phases of the SNF Prospective Payment System (PPS), when roughly 20% of nursing facilities filed for bankruptcy, nurse staffing levels plummeted 17-33%, and survey deficiencies increased significantly," Rosenbloom warned in a statement.

According to the report, for every dollar of allowable cost incurred in providing long term care for a Medicaid patient in 2011, the Medicaid program reimbursed approximately 90 cents on average. Unprecedented state budget deficits and the expiration of federal stimulus funds on July 1, 2011 contributed to the second lowest percentage of cost coverage in the ten years that this annual report has been compiled.

According to the report, it appears that 2012 will look much worse than 2011 with most states either freezing or reducing rates. With negligible rate increases across the country, and conservatively assuming costs increase at the same pace as the forecasted annual Market Basket, the 2012 projected Medicaid shortfall will climb to almost $25 per Medicaid day. Under this scenario, nursing homes will experience negative Medicaid margins averaging almost 14%.

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