Through the looking glass

Nursing Homes, Feb, 2005 by Richard L. Peck

I've got to say, there's a certain Alice-in-Wonderland quality to long-term care financing. I'm not talking about the constant squeezes, real and threatened, on government reimbursement coupled with an ever-more-demanding regulatory environment (although that's weird enough). I'm talking about a practice that goes by many names--provider taxes, provider assessments, intergovernmental transfers--which all add up to one thing: taking advantage of Medicaid's peculiar structure to boost the income of nursing homes.

I hasten to add, I have nothing against nursing homes raising whatever funding they can in any legitimate way possible. Somebody has to make up for society's negligence if these organizations are to do their jobs properly. It's just that these vital healthcare players, in order to stay afloat financially, have to resort to a form of trickery--starting with, of all things, a tax (or an assessment) on these hard-pressed providers.

In theory, providers are supposed to get their money back and then some through the federal government's Medicaid match, which automatically increases in amount when providers' costs go up. And this is not nickel-and-dime stuff, a point that was driven home to me rather forcefully with the recent announcement that Pennsylvania's new assessment program is expected to generate some $300 million for the state's 635 participating nursing homes over a four-year period--an average gain per facility of $267,000. Needless to say, in these financially hair-raising times, the extra money should help.

Of course, nothing is perfect. The "Medicaid match game" has been protested by facilities that are largely or totally private pay, which must pay the tax/assessment but get nothing back. Some states, too, have been known to find non-Medicaid outlets for the extra funds pulled in--a severe disappointment, to say the least, for those who are ponying up. Careful states like Pennsylvania have worked hard to limit the impact on private-pay providers and dedicate the funding to nursing homes, and many of these states boast a solid working relationship with the federal Centers for Medicare & Medicaid Services in crafting their programs. Still, some degree of inequity is unavoidable.

Indeed, taken as a whole, this seems a rather pathetic way to raise necessary funding for important providers of care--rather like trying to fill a bathtub with the plug out. What does this say about the way our nation views long-term care services and those who receive them? Doesn't it make nursing homes appear to be entering the nation's healthcare system through the back door? Or is "through the looking glass" more like it?

BY RICHARD L. PECK, EDITOR-IN-CHIEF

To send your comments on this editorial to the author and editors, e-mail peck0205@nursinghomesmagazine.com.