Nursing homes are stretching every dollar possible to make up for the shortfall in the state’s Medicaid reimbursement rate.
Thirty nursing homes in Wisconsin have closed since 2016 due to the lack of funding and a workforce shortage. Eleven have closed since the beginning of 2019, according to Leading Age Wisconsin website, an organization representing nursing homes.
No nursing homes in the Juneau and Sauk County areas have closed. However, the Medicaid reimbursement rate is making area administrators find ways to cut costs and improve efficiency to make up for the shortfall.
More residents, less reimbursement
Leading Age Wisconsin CEO and President John Sauer said about 65 percent of all nursing home residents are covered under Medicaid or Medicare Assistant program. The state sets reimbursement rates for about two-thirds of all nursing home residents. The average Medicaid reimbursement rate is $178.83 per day, per resident.
“It is that rate that determines what budgets look like at the community nursing home level,” Sauer said.
Wisconsin nursing facilities experienced about $307 million in losses in 2017-18 and lose between $71 and $79 per day for each Medicaid resident served. With the amount of Medicaid residents and the loss of money, President and CEO of the Wisconsin Health Care Center and Wisconsin Center for Assisted Living John Vander Meer said the formula doesn’t equal a sustainable model for nursing homes.
The other challenge is the workforce shortage in the long term care industry. Sauer said the problem is demographics and the Medicaid reimbursement rate not providing enough money for facilities to pay staff higher wages.
“We simply can’t raise our prices, generate more revenues and use those additional revenues to improve wages and benefits for long term care workers because the state rarely looks at what does it actually cost to provide long term care,” Sauer said. “Instead, it just says this is the money we have available and this is the reimbursement rate.”
The payments have resulted in charging private pay patients about $41,000 more annually to make up for the gap the Medicaid reimbursement.
“There ends up being a hidden tax for private pay residents because they end up having to pay more to receive care and services because the state under reimburses facilities between $70 and $80 a day for every Medicaid resident they serve,” Vander Meer said.
Vander Meer said a 2017 nursing home cost reports show 65% of residents pay with Medicaid, 22% of residents are private pay and 13% pay through Medicare.
Leading Age Wisconsin projects the population growth for residents 85 years old and older to increase by 140% by 2040. With facilities downsizing, delicensing or even closing, Vander Meer fears that population will have no place to go or a patient would have to find a facility far away from family.
Sauer said some operations around the state are either downsizing or delicensing as a way to limit Medicaid residents. Reedsburg Area Senior Life Center is taking that step.
The nursing home announced in April it will downsize its skilled nursing facility from 50 beds to 25. Twenty-two of those beds will transform into an assisted living facility composing of community based residential facilities.
Vice President of Senior Services Ryan Shear said the reduction is because of the space and common area requirements. Shear said Reedsburg Area Senior Life Center submitted plans for the state to review at the end of April to OK the changes.
He said residents at the senior life center will not be relocated because of the transformation and it plans to reach the 25 skilled nursing beds by “natural attrition.”
“We’re still going to serve those Medicaid people in many of our different settings,” Shear said. “But we have to be strategic how many we can afford to take care of. It’s unfortunate thing because we are a non-profit organization we are here to serve our community.”
Shear said the main reason for the transformation was to keep providing the “full continuum of care” and match the needs shown in the Sauk County Housing Study, showing a need for additional community based residential facilities and senior housing.
He said the Medicaid funding rate did play a role. Shear said the reduction of skilled nursing beds isn’t about what’s happening now.
It’s envisioning what could happen in the future if the state’s Medicaid reimbursement doesn’t improve, along with an increasing aging population.
“We absolutely see it that there is going to be more of our services needed in the future,” Shear said.
“Because of that low Medicaid rate, we had to make a decision what we have right now is not sustainable.”
Shear said the senior life center has taken other steps to reduce costs. Some individual duties have been rearranged for certified nursing assistant to clean tables, sweep the dining room floor and clean residents rooms, tasks usually assigned to housekeeping staff. Housekeeping staff is assigned to taking care of the common area. Other area nursing homes have taken or considering a similar route.
Sauk County Health Care Center Administrator Jennifer Vosen said the Reedsburg nursing home is fortunate to have the support of the county’s assistance in keeping the skilled nursing facility operating. The county approved $1.4 million from the $31 million tax levy to support the health care center for the 2019 budget, lower than the $2.2 million approved in 2018 and $2.3 million in the 2017 budget.
Vosen said the health care center has made adjustments to avoid asking taxpayers for additional funding. The Sauk County Health Care Center receives about $5 million a year in Medicaid reimbursement. About 60 to 70% of residents receive medical assistance through Medicaid or other types of Medicaid managed programs, she said.
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Vosen said non care direct positions, like housekeeping and nursing administration, have been eliminated at the Reedsburg based county nursing home and private pay rates increased by 3% the last couple of years so taxpayers don’t have to take on the burden.
She said the health care center hasn’t looked at reducing nursing home beds. The facility is looking into possibly expanding its facility to “get ahead when the need is going to hit crisis level,” Vosen said. She said the next phase is looking into finances and an operational assessment to determine “what that would mean for Sauk County.”
“At this point and time there are no set in stone plans to expand,” Vosen said.
North Shore Healthcare CEO David Mills said the organization has also taken steps to become as “incredibly efficient” as possible without impacting patient care. North Shore Healthcare owns a total of 41 facilities throughout the state, including Wisconsin Dells Health Services and Elroy Health Services.
Part of that efficiency includes adopting more technology to increase automation, IT and electronic methods of documentation. Mills said the Medicaid shortfall also means being more smart and frugal in operations, more barging power with vendors to negotiate pharmacy, therapy and other services rates and lease payments with landlords and property companies.
“There is no margin for error,” Mills said.
Sauer said a survey conducting by Leading Age Wisconsin in 2018 shows 1 in 5 caregivers positions are vacant, with over 16,000 vacant positions statewide.
Shear said recruiting new people for the job of a certified nursing assistant is a challenge. The transformation of the facility means less staff will be needed because of the difference in care needs associated with an assisted living compared to a skilled nursing facility.
“We’re reducing our census and because of that we do have enough staff at this time,” Shear said.
Vosen said the county health care center has seen an increase in open caregiver positions in the past year and it took three months to fill one registered nurse position.
“We are now starting to see the impact of the caregiver shortage,” Vosen said. “It has started to hit here.”
Mills said Wisconsin Dells and Elroy Health Services addressed part of the staffing crisis through retaining workers.
“They have been able to somewhat combat the staffing challenges and being able to recruit by creating a culture that people really want to be a part of,” Mills said. “It’s one thing to provide the appropriate wages, but what they’ve done really does speak volume to both of those centers on retention and having an environment that people want to be a part of.”
Mills said North Shore Healthcare isn’t immune to pressures of providing higher wages and having difficulty recruiting people for skilled nursing facilities.
“As economies change and they get better there is other opportunities for employment…,” Mills said. “It does make it very, very difficult to recruit given the wages that skilled nursing organizations are able to provide,”
Democratic Gov. Tony Evers proposed a $14.8 million to increase to support caregivers and a 2.5% increase general rate increase for nursing homes with 1.5% going towards direct care workforce over the course of the biennium in his 2019-2021 budget. Leading Age Wisconsin and the Wisconsin Health Care Association is requesting $83 million over the biennium.
Vosen said Evers proposed increase would help reduce the need for nursing homes to consider trimming expenses and temporarily cease increasing private pay rates, but it wouldn’t amount to much money in the overall long run.
Shear agrees. He said the 2.5% increase would equal about $25,000 for the entire facility, not enough to cover one Medicaid patient staying at the nursing home. Shear said Reedsburg Area Senior Life Center’s private pay rate is about $310 a day or $113,000 a year to care for someone in a skilled nursing facility.
“In the grand scheme of things that isn’t a lot of money when it comes to taking care of an entire person,” Shear said.
The legislative budget approved June 6 by Republicans includes increasing Medicaid spending by $200 million with $30 million more for nursing homes, $37 million for personal care workers, $27 million for direct care givers and $30 million for aids to children and families.
Vosen said the additional funding approved by Republican legislatures would be “a start in the right direction.”
Sauer said another way to address the workforce shortage challenge is educating high school students, guidance counselors and teachers about career opportunities in long term care, like registered nurses, license practical nurse and certified nursing assistants.
“Because we do have to invest in our careers and we are trying to make that despite the challenges of today a viable option and an important option for people to consider working in this area because it is a rewarding field,” Sauer said. “People do make a difference in the lives of individuals and we are trying to educate people about opportunities that are ahead of them and educate the payers people should not have to work below wages, wages below the level of service, that they actually provide to older adults.”
Despite the current situation of the long term care industry, Vosen said she feels an obligation to give senior citizens a place to live.
“Our seniors have been our mothers, fathers, teachers, our police officers, our educations and a lot of them have given a lot of themselves throughout their lives,” Vosen said. “They deserve an opportunity to live be able to live in a nursing home that’s in their community that they live in or choose to live in.”
Wisconsin State Journal Reporter David Wahlberg contributed to this report.