After 15 years of Medicaid reimbursement cuts, a group of providers says a cost-of-living increase is not enough to address compounding funding issues that threaten the quality of healthcare.
The group of leading New York nursing home associations urged the state to include a $510 million investment and a promise to reform Medicaid reimbursements in next year’s budget.
Those striking figures are aimed at addressing an even larger $810 million gap between state funding and nursing home expenses.
“New York’s Medicaid program pays for the overwhelming majority of our nursing home days, but the state’s Medicaid rate for nursing homes covers only 75% of the daily cost of care for each resident, resulting in an $810 million annual state share gap between Medicaid rates and costs,” the group claimed.
The organizations — LeadingAge New York, the New York State Health Facilities Association, the New York Providers Alliance and others — delivered the requests in a Nov. 3 joint letter to Governor Kathy Hochul.
It’s the latest in a string of requests that the state government address funding shortages and small Medicaid reimbursement adjustments in New York.
In early 2023, nursing home advocates requested a 20% Medicaid boost. The state ultimately settled on 7.5% — a number that leaders say was a good, but inadequate step.
“While our members appreciate the promised 7.5% increase approved in the 2023-24 budget, it will not cover even the 2023 cost increases,” the letter states.
The organizations say the bump up has been largely offset by the high inflation of 2022 and the rising cost of wages.
Leaders also noted that even a 20% increase would not have totally addressed the funding shortfall for nursing homes.
“While we are grateful for the 7.5% Medicaid increase that was included in last year’s final budget, it is insufficient to cover the cost of care for Medicaid patients in nursing homes,” Stephen Hanse, president and CEO of NYSHFA told McKnight’s Long-Term Care News. “The prior administration had cut Medicaid spending for over 15 years straight for nursing homes. So when you ran the numbers based on 15 years of no cost-of-living increases for Medicaid, to cover the cost of Medicaid, it would have required a 43% Medicaid increase.”
Hanse was emphatic that New York needs to take action: “The data speaks for itself. The state needs to invest in nursing homes.”
Ripple effects
The joint letter warned that failing to address this long-running funding issue is impacting healthcare across the state, not just in nursing homes.
“The gap between Medicaid rates and costs has led to wide-ranging ripple effects throughout our health care delivery system impacting consumers statewide,” the letter asserts.
The organizations note 10 nursing homes closed in the last three years and that there are 5,600 fewer beds available in facilities across the state due to funding struggles. These shortages have led to resident wait-lists, bottlenecks at hospitals and facilities being forced to refuse admissions for new short-term residents.
These cascading effects underscore the importance of the state addressing the funding shortage in the short term, according to industry leaders.
“We recognize that $810 million is a large number — and that number is large due to the state’s failure to invest in nursing homes,” Hanse said.
The New York organizations, however, also recognize that the entire funding shortfall cannot be made up in a single budget. Hanse described both last year’s 20% proposal and the current $510 million request as “bridges” between what nursing homes need and what the state is able to provide.
“The $510 million we’re asking for in that letter will be a good downpayment to get us where we need to be. And then in 2025 — [we would] work with the state in the context of establishing an equitable reimbursement system for nursing homes throughout New York,” Hanse said.
Hanse was “cautiously optimistic” — citing a good working relationship with the state — and hoped that the reimbursement issue could be meaningfully addressed in a two-year timeframe.
