Medicaid Rate Reform

Many providers who are reliant on Medicaid reimbursement are facing financial distress. Current Medicaid rates may be based on outdated methodologies and may be insufficient to fully cover these providers’ costs. Accessing capital for renovation and construction is difficult, but the renovations are necessary to support and improve quality of life for the residents.

Full Proposal

Preserve the availability of facility-based long-term care in the following ways:

• Implement Medicaid and Supplemental Security Income/State Supplement Program (SSI/SSP) reimbursement systems, including for skilled nursing facilities (SNFs) and assisted living programs (ALPs), which cover actual provider costs adjusted for inflation, and include targeted adjustments aimed at addressing the higher costs of serving individuals with specialized needs. Examples include: individuals with dementia and other neurobehavioral conditions, mental illness, substance use disorders, intellectual/developmental disabilities, and medically fragile young adults. This should include incorporating incentives to promote desired outcomes.
• Update the Medicaid rate methodology to include:
  • Use of the Patient Driven Payment Model (PDPM) for acuity adjustment, rate development and Medicare Upper Payment Limit calculations.
  • Continuation of the current historical cost model for capital reimbursement with updated per bed construction caps; as well as reimbursement for investments in older buildings currently not reimbursed.
  • Updated cost base, Wage Equalization Factor (WEF) adjustments and prices, with periodic (i.e., every 1-4 years) updates to all three elements.
  • Continuation of existing peer groups; with consideration given to creating an additional peer group for small facilities.
  • Minimum overall system base funding equivalent to 95 percent of total updated reimbursable costs plus the cost of the Nursing Home Quality Initiative program (which should be state funded) and reimbursement for the provider tax.
• Enhance assisted living program and nursing home Medicaid rates with bridge funding in the budget and include an annual inflation adjustment.
• Assess  LHCSA reimbursement via benchmarking through a transparent stakeholder process to determine provider costs and establish regional hourly benchmark reimbursement rates for Medicaid Managed Care, which would be updated annually. NYS may require payment of these rates or continue with negotiated rates, but such rates shall correspond to the actual cost of care delivery.
• Assess Medicaid certified home health agency (CHHA) fee for service rates and update Episodic Payment System with adjustments needed to ensure sustainability of home health agencies and that support agencies’ abilities in staffing, training, care management and operations necessary to meet community need. Managed care plans operating in NYS including Essential Plans and Medicaid managed care plans should be examined for alignment.