Many states continue to have its budget difficulties, and with shrinking revenues affecting a number of states coupled with extensive growth in spending, it is anticipated that Medicaid coverage, benefits, payment rates, reimbursement delays, and other challenges will affect many health care providers. Actual payment rates may remain stagnant or have modest inflationary impacts affecting per diem cost component ceilings or targets if applicable, or rates could actually be cut or increased slightly. Until final approvals are obtained, many impacts are in the proposed stages of discussion.

The following summaries are provided reflecting recent activity affecting individual state programs, in particular changes to reimbursements and provider tax assessments:

California continues to deal with significant budget shortfalls, and payment delays in Medi-Cal reimbursements are expected to continue for a number of provider types providing services to Medicaid recipients until the State has an approved budget. Various programs, including education and health and human services are slated to be affected by substantial reductions in appropriated funds, and payments from the Medi-Cal program will likely be reduced as well. Although payment rates to SNFs are not expected to be affected by Medi-Cal payment cuts in 2009, reimbursements from the Medi-Cal program in general to all health care providers in the state are expected to be delayed (similar to the delays that occurred during the latter part of the summer of 2008) if the state does indeed run out of cash as forecasted by the Governor in early December. Unless the budget dilemma is resolved soon, the state is allegedly on track to be broke by the end of February or early March, and reimbursement cuts to non-SNF providers are likely as well.

Nursing home providers in Florida have been notified that Medicaid payments, starting March 1, 2009, may be reduced by a 10.5% payment cut or an average of $14.75 per patient day. To avert such a dramatic proposed drop in reimbursement, the Senate has proposed the adoption of a Quality Assessment that would become effective April 1, which, if approved by the Governor and CMS, would offset the potential reductions in rates and also provide funding to pay for reductions in payments to hospice providers as well. Based on a consultant’s analysis, the benefits derived from a Florida provider tax could essentially negate the impacts of the current Medicaid Trend Adjustment (“MTA”) that serves to reduce the computed Medicaid per diem rates updated each rate semester. SNFs with licensed beds under 46 and CCRCs will be exempt from the proposed provider tax. Preliminary estimates have the assessment slated at $16.00 per non-Medicare day for most nursing home providers, with a benefit add-back of $15.70 per Medicaid day plus a potential additional $6.00 add-on for a pricing model transition.

An Illinois contact has advised that nursing facilities in the state should receive reimbursements for August 2008 services in January 2009 (about 120 days old from date of billing). The cash flow crunch in this state is expected to get worse through the rest of the fiscal year, and the contact at the Bureau of Long Term Care expects that payments to Medicaid providers will fall further behind unless a major shift in the revenue stream occurs - which does not appear likely at the moment. It is also noted that the loan is indeed short term, and efforts may be made to modify the nature of the loan - as the repayment outlook appears grim.

Payments to nursing homes in Wisconsin may be delayed also, but not necessarily due to budget issues. Claims processed by the new EDS ForwardHealth Medicaid claim processing system appear to have the associated payments sent to providers arriving up to four (4) days later than under the prior system. This is triggering cash flow difficulties for SNFs, especially those with high Medicaid utilization. The states’ health care association is working with EDS to identify the problems and seek resolution as quickly as possible.

Maryland has proposed approximately $300 million in budget reductions for 2009, and if passed, payments to nursing homes will receive a reduction of $25.5 million in total funding according to a Maryland-based health care association. Specific per diem impacts affecting nursing home providers are not available at the present time.

The Pennsylvania quality assurance fee, or provider tax, for the 2008-2009 assessment period is expected to be announced in the near future in the Pennsylvania Bulletin. The updated rates, which will in all likelihood be retroactive to July 1, 2008 and extend through June 30, 2009, are expected to drop slightly from $24.83 to $23.75 per non-Medicare patient day for non-exempt facilities; and from $2.40 to $2.30 per non-Medicare day for county owned SNFs, CCRCs, and facilities with less than 50 beds. The proposed rates also include a modification of the supplemental revenue benefit from $12.62 per Medicaid day to $10.18.

The state of Georgia, because of statewide budget cuts, will not be implementing long-awaited Medicaid reimbursement increases to hospitals and physicians in 2009. But possible 5% cuts in reimbursement rates were not initiated either, which could have had an more severe impact on total appropriated funds once the Federal match is considered.

Various medical assistance programs in South Carolina have affected, that is diminished, Medicaid benefits and programs offered by the state’s Department of Health and Human Services. Since July, approximately $500 million in cuts to the state’s healthcare programs for children, the elderly, poor and disabled have been made according to an agency official in contending with Medicaid cutbacks due to budget shortfalls. Potential additional cutbacks may force Medicaid reimbursement rates to be lessened in the future, although DHHS has not yet developed recommendations as to what sectors would be affected and the nature of the cuts if they will have to be made

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