Governor's
Proposal Would Raise Medicaid Revenues for Many Nursing Homes
Written By:
Attorney
Jeffrey A. Marshall
, CELA*
In 1991,
Congress passed an amendment to Section 1903 of the Social Security Act
that requires the Federal Government to make Medicaid matching payments to
states if a state levies certain taxes on nursing homes.1
(42 U.S.C. 1396b). In order
to get these federal matching funds, a number of states thereafter passed
legislation that assessed nursing homes based on number of beds.
As part of his
Bud
get proposal in March, Governor Rendell has suggested that
Pennsylvania
tap into these additional federal matching funds by levying a "bed
tax" on nursing homes. The
money received from the tax, along with the federal matching funds
Pennsylvania
receives, could then be returned to the nursing facilities.
It is important that additional Medicaid funding be provided to
nursing homes to offset an expected 7.6% reduction in Medicaid payments.
In late May, after meeting with groups representing
the state's long term care facilities, the Governor's plan was
expanded. If the long term
care facilities pay $252 million in bed taxes, it is estimated that
Pennsylvania
will receive an additional $344 in federal matching funds.
The sole purpose of the bed tax is to generate state
tax funds that will entitle
Pennsylvania
to federal matching funds. Then,
the combined state and federal funds can be funneled back to the
providers. According to Mike Nardone, the Governor's spokesman, "All
of the dollars that we raise from the assessment, plus the revenues that
those dollars will draw down in terms of federal participation under the
Medicaid program, will basically be plowed back into the nursing homes."
2
On the surface this looks like a "no-brainer."
The federal government is offering money and
Pennsylvania
needs that money. However,
like most issues related to federal Medicaid laws, things are more
complicated than they seem on the surface.
Some nursing homes won't receive any of the additional funds and
some will receive more of the additional funding than others.
Because of uniformity requirements, the bed tax will have to be
uniformly applied to nursing homes across the state.
However, some nursing facilities don't participate in Medicaid
and wouldn't receive any additional revenues while a small minority of
Medicaid participating nursing homes would not receive enough additional
Medicaid funds to make up for what they would pay in bed taxes.
The Pennsylvania Health Care Association, which
represents 325 long term care and senior service providers throughout the
Commonwealth, strongly supports the Governor's proposal.
On the other hand, Ron Barth, President of PANPHA, an Association
of non-profit service providers believes that the redistribution of funds
would create "a tremendous windfall for certain types of providers and a
loss for others." According to Mr. Barth, "in the current environment
- inadequate reimbursement, insurance costs, wage pressures - the losers
would have no choice but to pass the assessment to private-paying
residents." 3
The Rendell Administration says it will seek a waiver
of federal uniformity requirements so that the 146 nursing homes in PA
that do not participate in Medicaid will not have to pay the tax.
Mr. Nardone estimates that of the 601 facilities that would be
involved, only 26 would pay out more that they will get back.
The other facilities would see their Medicaid payments increase by
13 to 14%.4
The proposal will have to be approved by the
Pennsylvania Legislature, and any waiver request will need approval by
Federal authorities.
1 The Medicaid Voluntary
Contribution and Provider Specific Tax Amendments of 1991, P.L.102-234.
2 Quoted in an
Associated Press article dated
May 31, 2003
.
3 Ron Barth,
Letter to the Editor of the
York
Daily Record,
Sunday May 25, 2003
.
4 Quoted in an
Associated Press article dated
May 31, 2003
_____________________________________________________________________________________________________________________________________
Study
Indicates Uninsured Face Decreased Access to Care and Increased Mortality
The
Congressional
Bud
get Office reported on May 13th that nearly 60 million people
lack health insurance at some point during the year, although official
estimates fail to distinguish between people who lack coverage for a few
months and those who are uninsured for a full year or more.
A recent study details the effects that a lack of medical insurance
has on the uninsured.
A
June 2003 supplement of Medical
Care Research and Review presents a compelling case that health
insurance does lead to improved health and better access to care.
The supplement, with Thomas Rice as guest editor, includes four
commentaries on the topic.
The major findings from the study include:
♦ The uninsured receive less preventive care, are diagnosed at more
advanced disease stages, and once diagnosed, tend to receive less therapeutic care (drugs and surgical interventions);
♦ Having health insurance would reduce mortality rates for the
uninsured by 10-15 percent; and
♦ "Better" health would improve annual earnings by about 10-30 percent
(depending on measures and specific health conditions) and would
increase educational attainment.
The supplement, published by Sage Publications with support of the Kaiser Commission on Medicaid and the Uninsured, features
an exhaustive review of 25 years of research literature. More information is available online at the Kaiser Commission on Medicaid and the
Unisured website at: http://www.kff.org/content/2003/4115/
_____________________________________________________________________________________________________________________________________
Government
Administrator Comments on Problems with Medicare Managed Care Plans
Tom Scully, the Administrator of
the Centers for Medicare & Medicaid Services recently issued a
statement regarding current problems with Medicare+Choice programs.
While intending to be supportive of President Bush's plan to
expand enrollment in Medicare+Choice, the statement paints a bleak picture
of the past results of this form of privatization.
Part of Mr. Scully's statement is reprinted here.
The complete statement is available online at the following link: http://cms.hhs.gov/media/press/release.asp?Counter=734
"The Centers for Medicare & Medicaid Services recently released
its 2004 Medicare+Choice rates. While these rates are increasing, they are
still insufficient and leave the program stagnated at payment levels that
are likely to result in a continued reduction in participation in the
Medicare+Choice program.
Medicare+Choice has seen falling participation in recent years that has
primarily hurt low-income beneficiaries. Studies released last week by the
Rand Corporation and previous studies by
Emory
University
show that poor beneficiaries, often in large urban areas,
disproportionately enroll in Medicare+Choice plans. These beneficiaries
often cannot afford increasingly expensive Medigap plans that do not offer
drug coverage. As a result, these beneficiaries choose to enroll in
Medicare+Choice plans to lower their out-of-pocket costs while getting a
drug benefit. The increasingly diminished value of Medicare+Choice
payments have left many of these Medicare beneficiaries with a less
attractive benefits package.
The Medicare risk program began in 1982 and by 1997 about 18 percent of
Medicare beneficiaries had enrolled in Medicare+Choice plans. At that
time, enrollment in the Medicare+Choice program was projected to almost
double by 2002. In the 1997 legislation Congress changed the
Medicare+Choice payment formula with the best of intentions - but the
new formula backfired. Most urban plans had reimbursement growth capped at
2 percent for five consecutive years, as costs grew by up to 10 percent a
year. The results were predictable: since 1997, beneficiary enrollment has
dropped to 11 percent of beneficiaries and since the year 2000, more than
2 million beneficiaries lost their Medicare+Choice coverage as plans
dropped out of the program while others are seeing their benefits shrink.
While the 1997 reforms were intended to encourage more private plan
coverage in rural areas of the country, there has been no increase in
Medicare+Choice plans in rural areas, and there has been a significant
reduction in access to coverage in urban areas. It is now very hard to
find Medicare+Choice plans in
Detroit
,
Chicago
,
Houston
,
Philadelphia
,
New York
City and many other urban areas where the bulk of plans have dropped out
of the program.
Beneficiaries, especially low-income beneficiaries, have been left with
higher co-payments, higher deductibles, higher out of pocket costs and
reduced drug benefits. The beneficiaries that have been hurt by the
collapse of Medicare+Choice are the ones that can least afford lower
benefits or the high costs of Medigap."
_____________________________________________________________________________________________________________________________________
Did you know. past
issues of the Elder Care Law Alert are available on our website at:
www.paelderlaw.com/news.html
_____________________________________________________________________________________________________________________________________
"Understanding the Rules: Medicaid
Payment for Long Term Care"
A Free Seminar Presented by
Marshall & Associates
Seminar
Date & Location
Saturday, June 14th at
10:00 AM
The Radisson at
Lackawanna
Station,
Scranton
Reservations are suggested, but not required.
SIGN UP ONLINE or call 1-800-401-4552 for more information or to reserve your
spot for one of these seminars!
_____________________________________________________________________________________________________________________________________
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