Healthcare groups say compromise is ‘close’ in long-awaited rate reform

Competing legislation drives negotiations
Published: Feb. 18, 2022 at 2:04 PM CST
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CORRECTION: An earlier version of this story mistakenly said “Department of Human Services” instead of “Department of Healthcare and Family Services.”

SPRINGFIELD (WGEM) - Nearly two years in the making, the initiative to reform how nursing facilities get paid for Medicaid patients appeared to be at an impasse earlier this year when a lobbying group pushed competing legislation.

Health Care Council of Illinois, which represents nursing homes across the state, introduced a competing bill to the initial proposal from the Department of Healthcare and Family Services in January following months of negotiation between them and other nursing home representatives.

There are key differences between the two proposals but are based around a similar framework. Currently, HFS changing over a system used to record and calculate how facilities are reimbursed for caring for Medicaid payments, following the lead of the federal government who already made the switch Illinois is attempting to make now.

Where the disagreements come is in terms of staff funding and how new policies would affect a list of 50 nursing homes identified by HCCI as at risk for closure if the policies were to go through. HFS argued those facilities are purposeful targets of reform and aren’t at risk for closure if they make “reasonable reform” with HFS’s proposed legislation.

Now, HCCI Executive Director Matt Pickering said they “are so close” to a compromise and that it may come in a few weeks. A recent written statement from HFS said they are hopeful a consensus will be reached in the coming weeks as well.

No matter the disagreements, the matter of rate reform will ultimately be decided by the General Assembly who must pass the laws enacting the reform.

‘Targets of reform’

The Department of Healthcare and Family Services has been working with legislators, nursing home representatives, and other stakeholders to change the payment system for Medicaid to nursing care facilities. Their focus was on improving staffing levels and providing more “equitable” care to Medicaid customers.

However, in their research of the rate reform, the department noticed a trend among certain facilities with a high concentration of Medicaid patients.

“They’re making more money going into this than almost anybody else, probably as a group more than anybody else and they’re staffing not as well,” Director of HFS Theresa Eagleson said. In a report filed by the department, they said certain facilities that were higher Medicaid and lower staffed were making more in profits than other facilities. That, in part, was a driver of the reform according to HFS.

Another driver of high profits was by the facility “over coding” the needs of their residents. This would mean facilities would report a patient as needing more care than they actually received, which would, in turn, lead them to get more reimbursed to them. It’s difficult to catch that under the current system. The system in the proposal would be based on what care was actually provided, rather than what kind of care was reported as necessary.

When analyzing HCCI’s complaints, HFS determined the 50 nursing homes were intended targets of the reform to the system, as they engaged in low staffing and high concentration of Medicaid patients.

“It’s not true,” Pickering said of upcoding and understaffing “If they want to move to the new system, we were willing to work with them on that as long as there was an appropriate transition.”

Pickering said he and his nursing homes agree to the switch in systems, but believe the information on over-coding paints the nursing homes in a bad light. He also said the COVID-19 pandemic contributed to low staffing levels.

“HCCI’s dismissive response to chronic under-staffing is an effort to divert attention away from its causes and correlates like profit-seeking and over-coding,” HFS said in a written response to Pickering’s remarks.

Staffing levels

One of the agreed-upon intents of both agencies was the need to improve staffing levels in nursing facilities. Staffing levels have been low and turnover rates have been high, which both HCCI and HFS argued hurts the quality of care a resident receives.

“We are in the middle of a staffing crisis,” Pickering said. “We don’t want staff that is temporary in nature.”

“The number one concern that upset [residents] the most was the turnover of the staff and the lack of continuity,” he continued.

In a nursing home, the staff becomes a part of the residents’ lives. A place of work for the staff is the home of the resident, so a large amount of turnover is felt by residents.

The lack of consistent staff is only hurt more by the lack of adequate staffing altogether, according to HFS. One of the intended reforms of HFS’s proposal was to implement a tiered funding system in order to encourage higher staffing levels in nursing homes, as opposed to HCCI’s proposal which had a similar funding level no matter the staffing.

The better staffed a facility is, the more they would be reimbursed according to HFS’s proposal. HFS called HCCI’s proposal an “equalizer,” which would take away the incentive, they argue.

“If [residents] ring a bell and no one comes, that’s a huge problem, right? If there’s no one to assist with meals or toileting or something like that, that’s a problem,” Eagleson said. ”People should be hiring, the staffing ratios should be better.”

Possible closures

During negotiations, HCCI said they identified around 130 facilities that would see a decline in revenues because of the proposed changes by HFS. Within those 130 were 50 facilities that they say would be at risk for closure based on the proposed reform.

Thirty-seven of those facilities are members of HCCI, 11 were unaffiliated. Part of their reason for the competing legislation and informing HFS of the 50 homes, they say, was to give the unrepresented nursing homes a seat at the table.

HCCI argued that if those facilities were to close, it would displace 5,000 residents and they say there is no place for finding placement for them. They presented their research on the 50 nursing facilities to HFS. Pickering said HFS told them they were “not far off” on the conclusions of their analysis.

“When we realized that our analysis was not far off, it was just unacceptable to us,” Pickering said. “That’s just not okay with us.”

Pickering said HCCI accounts for 60% of Medicaid residents in their facilities.

HFS disputes that the 50 facilities are at risk of exposure. They said with reasonable reform those facilities can still be profitable, and called HCCI’s claims of closure a “red herring.”

Pickering counters that the facilities are starting at a disadvantage from other facilities, putting them on the “brink” of closure.

“Most of them we believe are not truly at risk of closure,” Eagleson said. “If they are, then we’re not sure that’s bad for the Medicaid customers in those facilities if those facilities decide not to change.”

As for the 5,000 HCCI claims that would be displaced if the facilities closed, HFS called that claim “inaccurate.”

“The idea that there is a scarcity of nursing home beds in Illinois currently is not true,” the HFS statement continued.

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