Gov proposes upping Medicaid reimbursement, but not as much as study recommends

By: - December 16, 2022 6:08 pm

The Montana Department of Public Health and Human Services (Photo by Eric Seidle/ For the Daily Montanan).

After a study of nursing home rates, the Gianforte Administration has proposed to bump up the per diem for the stressed facilities, but only for a fraction of the recommended increased rates.

Nursing homes are on the ropes financially, and so far, 11 facilities have closed or announced closures in the state, according to data from the Montana Health Care Association.

They also have been operating at well below capacity, recently at roughly 52.7 percent, according to the Montana Department of Public Health and Human Services.

Last week during a presentation to a legislative budget committee, lawmakers heard findings from the study commissioned by the Health Department. 

The Guidehouse report recommended a per diem rate of $278.75, up from the current rate of $208.71. But nursing homes aren’t likely to see the full increase.

The proposed budget from the Governor’s Office requests funding generally 58 percent of the gap the study identified in 2024 and 36 percent of that differential in 2025, according to the report to legislators.

A Health Department spokesperson said the proposal represents a “significant and historic infusion of funds into Montana’s Medicaid system.”

However, the head of the Montana Health Care Association said it won’t be enough to prevent more closures, especially because changes aren’t set to take place for another six months, until July 2023.

At the meeting, Sen. Mary McNally, D-Billings, questioned the level proposed for funding. She said budgets reflect priorities, and the current recommendation doesn’t measure up to the long anticipated study.

“I wouldn’t expect it to be funded at 100 percent,” McNally said. “But I find the 36 percent pretty stunning.”

 Sen. Chris Pope, D-Bozeman, said he understands the rates need to be fair to taxpayers and also support nursing homes. He said he wanted to know if the amount would provide stability. 

“We’re seeing nursing homes in my community very close to shutting down right this minute,” Pope said.

Health Department Director Charlie Brereton agreed the goal was stability.

However, Brereton said those dollars are a fiscally sound starting point for discussion. He said they’re also recommended in the context of another trend in Montana and nationwide, a “surging and soaring” demand for home- and community-based services.

“We do not want to, at this point in time, risk overfunding certain providers, perhaps or potentially at the expense of others,” Brereton said.

Plus, a summary of the presentation that discussed considerations in setting rates noted the state of Montana should not be paying for empty beds.

The intent is to use one-time only funding to get money out the door as quickly as possible to Medicaid-heavy providers, Brereton said: “We know that they are struggling.”

Near the end of the discussion, Chair Ken Bogner, R-Miles City, reminded legislators it’s their prerogative to set the budget — whether the proposal for funding is at 0 percent or 200 percent of the recommendation.

“We’re going to put our fingerprint on it,” Bogner said.

Rep. Jane Gillette , R-Bozeman, said she wanted to understand other fundamental pieces of the puzzle: where beds are needed in Montana, where the gaps are, and how many are needed.

“Does the Department have the intent to address that question?” Gillette said.

Cory Jones, presenting the Guidehouse study, agreed the number of needed beds was an important question, and he said it could be addressed in a follow up study. However, he said it wouldn’t be completed in time for the 2023 Montana Legislature.

In an email after the meeting, Montana Health Care Association Executive Director Rose Hughes said the study was an important and critical undertaking, and she was grateful for it. 

However, she said the governor’s budget does nothing about the gap until July 1, 2023. Also, she said the proposed budget will get the rate to just $238.77 at the end of the coming biennium, and by then, the cost will be closer to $300 with inflation.

“All in all, I do not expect this proposal to stop the bleeding and would expect additional facilities to close as they continue to wait for relief and a fair reimbursement rate,” Hughes said.

Hughes also earlier noted the state’s occupancy rate is based on two patients in each room, but some facilities have converted to private rooms, and the market trend is moving that way.

At the meeting, Health Department officials discussed ongoing trends in health care and the economy that affected the budget recommendations. Those include inflation and older people staying longer in their own homes.

Since 2010, nursing homes funded by Medicaid have seen a slow decline in use, although the drop accelerated during the Covid-19 pandemic, according to the Guidehouse study. Guidehouse is a management consulting organization that bills itself as an industry guide through complex topics including health care.

“We need to be careful about injecting dollars into the nursing facility system that can also be used to support care in community settings,” Jones said.

Additionally, inflation has hit nursing facility bottom lines. The study accounted for some 14.8 percent in a 30-month period.

“We’re seeing really pretty massive increases in wages,” Jones said.

In a statement after the meeting, Health Department spokesperson Jon Ebelt said stabilizing health care providers and expanding access to services “remains of paramount importance.”

“DPHHS’s proposed provider rate adjustments, including adjustments for nursing homes, deliver a significant and historic infusion of funds into Montana’s Medicaid system,” Ebelt said in an email.

“Given ongoing volatility in Medicaid enrollment and utilization, the department seeks to take an incremental, fiscally sound approach and closely monitor and evaluate the impact of such investments on our providers.” 

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Keila Szpaller
Keila Szpaller

Keila Szpaller is deputy editor of the Daily Montanan and covers education. Before joining States Newsroom Montana, she served as city editor of the Missoulian, the largest news outlet in western Montana.