Don’t Spend it All in One Place

by John W Rodat on January 8, 2015

Dennis Yusko reports in today’s Times Union that the NYS Department of Health is offering to “settle” 5,707 rate appeals with county nursing homes. Some of the appeals go back to 1995.

Specifically, what this refers to are the results, the technical methods, and facility-specific data used in calculations, by which the Department of Health determines the precise payment rate at which New York’s Medicaid program reimburses a county nursing home is subject to appeal. Along with the methods, appeals tend to be pretty technical. 

Having the cash will be nice, of course and my guess is that in most cases, they should take the deal. But before county officials get carried away with the significance of the offer, they should do the most basic arithmetic.

As Yusko points out:

Cash-strapped counties have argued for decades that the Medicaid reimbursement set by the state were far less that what it costs to provide eligible patients the necessary level of care.

Amid millions of dollars in annual red ink, several counties across the state have sold, or are working to sell, their nursing homes to private companies. 

Both statements are true – as far as they go. What Yusko’s story doesn’t say is that the cost of operating county-operated nursing homes is far greater than others in New York. That’s the primary reason they are such money losers.

What do the numbers mean on average and what do they mean for the future? Albany County lost over $6 million last year and their own projection is that they will lose over $2.1 million in 2015. And those figures don’t include everything (e.g., health benefit costs for retired Nursing Home employees). Getting $615,000 will help offset that. But, on average, the settlement numbers annualized amount to a whopping $31,200

This is all about the past. None of it takes into account that New York has changed fundamentally how it structures management and payment for nursing home care of Medicaid clients. Already begun is movement of such clients, even nursing home clients into various forms of managed care. That’s the future. And it won’t be friendly to nursing homes generally, and certainly not to expensive county-operated nursing homes.

Don’t spend it all in one place. And certainly don’t fool yourself into thinking that you can now make a county nursing home in New York a break-even deal.

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