Nursing homes sue state for Medicaid

A lawsuit has been filed against Gov. M. Jodi Rell alleging that the way the state reimburses nursing homes under Medicaid violates federal law.

The Connecticut Association of Health Care Facilities Inc. (CAHCF) has filed the suit as a last resort in a long-standing effort to compel the state to reimburse nursing homes for costs at a rate that is fair and reasonable. Rather than meeting the increase in health-care costs, Connecticut, and most other states, are cutting reimbursements.

Geer Nursing and Rehabilitation Center in North Canaan is one of more than 100 facilities across the state that are members of CAHCF, and therefore a complainant in the lawsuit. Geer Administrator John Horstman said it’s a simple matter of the state needing to follow the law in order for nursing homes to stay in business.

“We sign an agreement with the feds to provide services based on how Medicaid is supposed to pay us,� he said. “We base our operating costs on that. There is only so much we can do to cut costs. Staff and benefits make up 75 to 80 percent of costs. We need adequate staffing in order to provide good care.�

Nursing homes, nonprofit or not, need to at least break even to stay in business. They create jobs and pay taxes. But there is another layer of impact: They provide a vital service. If one nursing home cannot survive because of inadequate reimbursements, there won’t be another one to come along and replace it.

Connecticut has already seen a large percentage of nursing homes close in recent years. At the remaining homes, costs for private-pay residents have risen to make up for the Medicaid shortfall.

Unable to afford to wait any longer, CAHCF has also filed an injunction seeking a court ruling on the case.

“If a judge decides it has merit, we can hopefully move forward with negotiations and avoid the drawn-out, expensive process of a trial,� Horstman said. “Since this is filed in federal district court, a final ruling that requires states to follow the law would have a huge impact around the country. None of the states are following the rules of Medicaid. Most of their budgets are so awful they are only paying what they can afford. They treat Medicaid as a soft cost.�

Horstman said many states have recently announced cuts to Medicaid that fly in the face of increased health-care costs and the law. Michigan and Florida made 10-percent cuts, New York, 9 percent and Rhode Island, 6 percent, just to name a few.

Nursing homes are under-funded by more than $4 billion nationwide, according to Horstman. In Connecticut, the shortfall amounts to about $270 million for about 280 facilities. Some are harder hit than others, but none are avoiding the pinch.

For residents, it means a larger share of the costs will go to private-pay patients.

The result will inevitably produce a downward spiral as private-pay residents’ savings dwindle to the point that they qualify for Medicaid.

Past attempts to remedy the situation through legislation have failed. A good example is the “bed tax.� The supplemental tax imposed on private-pay residents several years ago was part of a plan to release about $120 million in federal funds that would have been the financial boost nursing homes needed. Instead, the state undermined the plan by diverting a large percentage of the funds to other state agencies.

Geer has recently reduced staffing by eliminating some non-direct patient care jobs in administration, as well as contracting for off-site laundry service. Costs not covered by Medicaid have been reduced as much as possible.

Under Medicaid guidelines, caps are placed on departmental spending.

“It’s not like we can pad costs and then complain we are under-funded,� Horstman said. “We are already limited. All we are asking is that we at least get paid what was agreed to.�

The state’s alleged illegal actions, according to CAHCF, constitute an unjust taking of private property.

“In shifting the financial burden away from itself,� reads a statement from CAHCF to its member facilities, “Connecticut has achieved a considerable benefit by not paying the full costs, while imposing those costs, like a stealth tax, on a shrinking group of nursing home residents and their families, on our employees and on our facilities.�

The governor’s office has yet to respond to the lawsuit.

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