The infusion of additional medical assistance funding derived pursuant to Section 5001 of The American Recovery and Reinvestment Act of 2009, also known as the Federal Stimulus Bill signed into law on February 17th, will ease some of the budgetary pressures that many states continue to have as challenges.  The relief comes in the form of temporary increases in the Federal Medical Assistance Percentages (“FMAP”) funding, and with its fungible nature, many states are able to avert Medicaid beneficiary coverage and or provider payment rate cuts.  Under the $787 billion recovery package, $87 billion is earmarked for increased Medicaid funding nationwide over the next two years.

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

California, despite a State Budget that passed in February, is relying on a series of six budget-related propositions to be passed on May 19th as part of a special election to close the projected $40 billion state deficit. It is expected that if the propositions are not passed, the state will have to initiate further provider payment cuts, and it is likely that the long-term care sector will be on the list of providers that could be impacted. With respect to the stimulus funding mentioned above, Medi-Cal is expected to receive an estimated $11.23 billion in additional dollars over the next 27 months. From a legislative perspective, Assembly Bill 367 would give the state controller authority to transfer to the Medical Providers Interim Payment Fund (“MPIPF”) an amount sufficient to cover payments to institutional Medi-Cal providers (for services after July 1) when no budget has been signed. The bill, which passed the Assembly Health Committee but still needs final approval by the Governor, would also repeal the state’s authority to intentionally delay Medi-Cal payments to providers for up to four weeks during any fiscal year.

Nursing home providers in Florida have been notified that Medicaid payments will be cut by 3% pursuant to a legislative action on May 8th. However, it is expected that the recently implemented Quality Assessment Program, that became effective April 1, would be modified such that the rate cut would be offset. The modification, which would be brought before CMS as part of their overall waiver approval, would expand the assessment, thereby allowing the state to draw down additional Federal dollars, and likely bump up the preliminary add-on rate.  It is also noted that the required CNA staffing level of 2.9 hours is being restored effective July 1.

The Quality Assurance Fees (i.e., provider tax) from nursing homes in Wisconsin could be modified under a proposed Assembly Bill # 75 that would increase the current assessment of $75/month per licensed bed by $75/month (from $900/bed to $1,800/bed on an annual basis) for the 2010 rate year, then further raise it to $170/month for 2011.  The 2010 changes would be in effect during the period from 7/1/09 to 6/30/10. The Wisconsin Association of Homes and Services for the Aging (“WAHSA”) has reported that the add-on payback to SNFs would increase to $4.26 per Medicaid day from the current level of $3.69, plus a 2% increase in rates would be granted to providers in 2010 and 2011. Although the fiscal impact on an individual SNF would depend on the amount of Medicaid utilization and occupancy, WAHSA has estimated that the net would be positive for 91.6% of the nursing homes in the state. These estimates are prior to any rate enhancements afforded for additional FMAP monies that Wisconsin will be receiving as part of the Federal Stimulus package.

The Pennsylvania Quality Assurance Fee, or provider tax, for the 2008-2009 assessment period have been finalized and are retroactive to 7/1/08 and will extend through 6/30/09. The rates have dropped 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 rates also include a modification of the supplemental revenue benefit from $12.62 per Medicaid day to $10.18.

The Governor of the state of Michigan has issued an Executive Order which will cut Medicaid payment rates to nursing homes by 4% effective 7/1/09. At this point, it appears that the EO cut will affect only the variable portion of the rate, similar to rate reductions in prior years.

Nursing home rates in Nevada are subject to a temporary cut in their per diem rates for services rendered in May and June 2009. The 2-month reduction is due to a discretionary authority the state has for potential low provider tax reserves needed to meet expected expenditures, and will amount to 7.95% off the current per diem rate.  July 1 is a reset month of rates, and it is possible that if the savings over the 2-month reduction period are more than adequate, then the July rates could be further enhanced. The provider tax amount in the state is currently set at $17.47 per non-Medicare patient day (for providers with total patient days more than 75,000, the rate is much less), and is it not known if the assessment amounts will change as of July 1.

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