Capping Federal Medicaid Spending Would Negatively Impact SNF Providers

Medicaid Spending is increasing at an alarming pace.?It is contributing to the growing Federal deficit and there is a need to consider some options that could decrease the growth rate and to encourage more efficient spending.?One of those options that is being considered by The Congressional Budget Office, in the report titled Options for Reducing the Deficit 2017-2026, is a cap on the amount that states receive from the Federal government to operate the program.?There are several advantages and disadvantages to this option.?This cap could significantly impact the Skilled Nursing Facilities (SNF), if adopted.

Capping Federal Medicaid Spending

Medicaid is a joint Federal and State program that covers acute and long-term health care for specific groups.?It generally covers health care for low-income people, families with dependent children, elderly people, and non-elderly, disabled people, and those below the state established poverty threshold (Congress of the United States Budget Office, 2017).?

The states administer the program and its daily operation, reimburse health care providers, health plans, payment rates, and spending capita.?The Federal spending is open-ended.?If a state spends more because cost increases or enrollment increases, higher Federal payments are generated.?The Federal share of cost averages around 63% (Congress of the United States Budget Office, 2017).?Medicaid spending has consumed a growing share of the Federal budget.?This increase in spending cannot continue at this rate, but the capping of Federal Medicaid spend has advantages and disadvantages.

Advantages

One advantage of this option of capping the Federal Medicaid spend is that the Medicaid spend would be more predictable.?At present, it is open-ended and there is no way to predict the Medicaid spend.?Another advantage would be that it would be more difficult for states to manipulate the Federal Medicaid funds.?States have an incentive to devote more money to Medicaid because the Federal government matches the state spend dollar for dollar (Congress of the United States Budget Office, 2017).?This could encourage states to shift other spending into the Medicaid spend to manipulate and increase the Federal contributions. ?There are disadvantages that counter these advantages.

Disadvantages

The disadvantages to this Federal Medicaid cap are that there could be a substantial shift of cost to the states.?This would be a great burden on states and could penalize those states that have a higher portion of elderly or low-income residents (Congress of the United States Budget Office, 2017). ??There could also be a decrease in the already low payments to health care providers or restrictions on eligibility for the program.?

It is difficult to set caps for each state that accurately reflects the cost.?It is also difficult to set caps that will incentivize efficient care and to maintain the current level of services that are available through Medicaid.??

?Skilled Nursing Facilities. The Skilled Nursing Facilities (SNF) are a focus for me, in my industry.?The SNFs are losing census year over year due to dwindling private-pay patients, and due to changes in Medicare reimbursement (Already in Crisis, 2019).?More Patients are being sent directly home, or are being covered by an ACO, limiting the time that is spent in the SNF.?Medicaid in the SNF is an all-inclusive amount, that generally does not cover the cost of the care for that patient.?The average SNF loses about forty-one dollars a day on each Medicaid patient (Already in Crisis, 2017).?There are fewer private and Medicare patients to help make up for the deficit.?This is the situation prior to any caps.

Medicaid rates have failed to keep pace with costs to care for the Medicaid residents.?Additionally, increasing regulatory requirements and the higher cost for staffing is putting an even greater burden on the SNF providers (Crossley, 2019).?

A cap on the Federal Medicaid spending would negatively impact the SNF industry because the states would not be able to make up for any decrease in funding.?There would most definitely be a decrease in the reimbursement for all the health care providers (Crossley, 2019).?The impact on the already strained SNF environment would be catastrophic.?

Many SNF providers would have to either limit their Medicaid census or close completely because of decreased Medicaid funding.?SNF providers would be forced to evaluate and take patients that were lower in acuity, creating a dilemma for those patients that need a higher care level.?

States such a Florida, would be unduly burdened with additional costs because of the number of elderly and refugees that reside within the state.?While I agree that there needs to be change, I do not feel this would be in the best interest of the Skilled Nursing Providers.

Changes and Strategies. There are several strategies that the Skilled Nursing Facilities could use to both mitigate the changes and to adjust to the potential lower reimbursement for their Medicaid residents.?The SNF providers should involve their Health Care Associations and encourage the groups to work together, with their lobbyist to fight the attempt to cap the Federal Medicaid spend.?They should reach out to their congressmen and the senators to voice their concerns.?The SNF providers should initiate a letter writing campaign to voice their concerns about the cap option.?

The SNF providers should also work to evaluate their processes and to make care more efficient, with a continued focus on positive outcomes.?The approach should be dual in nature, addressing the rising cost of health care and addressing the concern about the cap.

Conclusion

In conclusion, Medicaid costs are rising at a rapid rate.?There is a need to make changes in the program to decrease the rise in cost.?The current system is a joint program that is matched to the state, by the Federal government dollar for dollar, and is open-ended (Congress of the United States Budget Office, 2017). The Congressional Budget Office is considering an option to cap the Federal spending.?This option could have significant negative repercussions on the Skilled Nursing Facilities.?There should be changes to the Medicaid system, but a federal cap is not the best approach.?The SNF providers should work on becoming more efficient in providing care but should lobby against the Federal cap.

References

“Already in crisis:” Report says Medicaid funding shortfalls causing nursing homes to close Illinois skilled-care facilities lose $15,000 annually per each Medicaid patient on average Medicaid. (2019, April 24).?Daily Herald (Arlington Heights, IL).

Congress of the United States Congressional Budget Office.?(2017).??Options for Reducing the Deficit 2017-2016.?https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/52142-budgetoptions2.pdf

CROSSLEY, M. (2019). Threats to Medicaid and Health Equity Intersections.?Journal of Health Law & Policy,?12(2), 311–350.