Nebraska's Medicaid program is arriving late to the party for adopting a prospective payment system for nursing homes.
On July 1, 2001, the state will become the last to implement its skilled-nursing PPS.
But to Nebraska nursing homes, the PPS party is worse than a celebration of an Oklahoma Sooners victory over Nebraska's beloved Cornhuskers football team.
"It does just scare the daylights out of them," Ron Jensen, executive director of the Nebraska Association for Homes and Services for the Aging (NAHSA), says of his members.
Providers would just as soon not show up to the PPS shindig at all. They say the new Medicaid reimbursement system will cost providers $2.5 million in 2001 and $5.5 million in 2002.
The cuts come as the industry struggles with rapidly increasing labor costs and skyrocketing liability insurance premiums, say providers, who add that Nebraska's skilled-nursing PPS is too slow to account for changing conditions, with rates refigured only once every three years.
State Medicaid officials paint a much different picture.
"I don't see what Nebraska is doing as being different from what the majority of states are currently doing, to the best of my knowledge," says Bob Seiffert, Nebraska's Medicaid director.
"We believe now is the time that we must control the growth of nursing home expenditures through the prospective payment plan," Seiffert says. "The state could've announced this type of payment plan four years ago when it did a long-term-care study, but chose to wait until now to give nursing facilities time to adapt to the new model of services."
Seiffert says the rates are adjusted annually by an inflation measure tied to nursing home costs, not a general inflation measure such as the U.S. Consumer Price Index, which typically has been below the rate of increase of healthcare costs.
He adds that the PPS regulations allow nursing homes to ask for a state review if they have special circumstances that are driving up their costs.
The two state associations that represent nursing homes in Nebraska both have sharp criticism of the state's plans. The regulation is written, but a technical change to allow providers to appeal decisions of the state Medicaid director to circuit courts must be made before it goes into effect.
The Nebraska Health Care Association supports the concept of a PPS, but only if the rates are refigured every year instead of once every three years, says Patricia Snyder, the NHCA's executive director. "Three years is just too long a time," Snyder says, because conditions can change so sharply over that period.
"We just don't know how our facilities can afford nursing salaries in an environment of 2% unemployment (in Nebraska) and great shortages of nurses across the state," Snyder says. There also has been a huge increase in insurance premiums driven by a more-litigious population, he says. In one case a nursing home saw its premium skyrocket to $46,000 from $5,000 in one year.
Don Bakke, executive director of the Christian Homes Retirement Center in Holdrege, Neb., says providers will be forced to choose between proper staffing levels and financial health under the Medicaid PPS.
This year, Bakke says, "we've had periods where staff members have worked a tremendous amount of overtime. I'm thankful for those people, but it takes a toll on their personal lives, on morale in general."
To combat his labor shortage, Bakke has recruited three nurses from Korea, but even that solution has its perils: The nurses are still waiting for approval from U.S. immigration officials, and then they will need more training, particularly to help them adjust culturally to the U.S. and Holdrege in particular, a town of 5,800 in south-central Nebraska.
Christian Homes, like most nursing homes, is greatly dependent on Medicaid, with 64% of its 87 skilled-nursing beds filled with program beneficiaries, Bakke says. The complex also includes 30 assisted-living beds and 31 independent-living apartments.
The NHCA's Snyder also argues that the more efficient providers will be punished under the new system, because each nursing home's rates are based, in part, on past costs. When those homes that have already cut their budgetary fat see rising costs, Snyder says, they're on the way to financial starvation.
Snyder also worries that the federal government will approve new staffing standards that will cost more than the PPS will reimburse, but Seiffert, the state's Medicaid director, says a new federal staffing mandate would trigger a complete overhaul of the payment rates.
Jensen and the NAHSA take an even harder line against the PPS. Jensen's group would have opposed the PPS even with annual refiguring of the rates. The NAHSA wants personnel costs to be kept out of the PPS altogether and reimbursed on a cost basis. Jensen estimates that about 65% of a nursing home's costs are related to personnel.
Seiffert says that would amount to a blank check to the industry, although he acknowledges that nursing homes face a difficult labor market.
Jensen also argues that the state can save more money by continuing its assisted-living conversion program. The program gives grants to nursing facilities to make the switch, with the state saving about $20 per day in Medicaid for every nursing resident who moves to assisted-living care.
With the regulations moving through the bureaucratic maze toward implementation, Jensen says, "that basically leaves the industry with two choices: We can legislate and we can litigate."
Jensen would not say how nursing homes could sue the state, but he says the industry should get a sympathetic hearing in Nebraska's 49-member unicameral Legislature.
"Nursing homes in Nebraska aren't viewed as villains," Jensen says. "These are, by and large, community institutions that people feel some connection with, particularly in the smaller communities. It's not just an us vs. them issue in our state, thankfully."