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Chasing Millions In Medicaid Dollars, Hospitals Buy Up Nursing Homes

Westminster Village North, a nursing house and retirement neighborhood in Indianapolis, not too long ago added 25 beds and two kitchens to hurry meals supply to residents. It additionally redesigned affected person rooms to ease wheelchair use and added Wi-Fi and flat-screen televisions. This fall, it’s opening a brand new assisted residing unit.

“We have seen amazing changes and created a more home-like environment for our residents,” stated Shelley Rauch, govt director of the house.

The nursing house can afford these multimillion-dollar enhancements partly as a result of it has, for the previous 5 years, been amassing considerably greater reimbursement charges from Medicaid, the state-federal medical health insurance program for the poor. About half of its residents are lined by this system.

In 2012, the nursing facility was leased to Hancock Regional Hospital, a county-owned hospital 15 miles away. The lease lets it reap the benefits of a wrinkle in Medicaid’s complicated funding method that offers Indiana nursing houses owned or leased by metropolis or county governments a funding enhance. For Indiana, that interprets to 30 % extra federal dollars per Medicaid resident. But that cash is shipped to the hospitals, which negotiate with the nursing houses on tips on how to divide the funding.

Nearly 90 % of the state’s 554 nursing houses have been leased or bought to county hospitals, state information present, bringing in lots of of tens of millions in additional federal funds to the state.

Even although Indiana’s nursing house inhabitants has remained regular at about 39,000 folks over the previous 5 years, Medicaid spending for the houses has elevated by $900 million, largely due to the additional federal dollars, based on state knowledge. Total spending on Indiana nursing houses was $2.2 billion in 2016.

The funding enhancements have been pioneered in Indiana, however hospitals in a number of different states, together with Pennsylvania and Michigan, have additionally used the method. Advocates say it has been a key consider serving to to maintain Indiana’s metropolis and county hospitals economically very important at a time when many rural hospitals nationwide are going through critical monetary difficulties.

Westminster Village North, a nursing house and retirement neighborhood in Indianapolis, not too long ago redesigned affected person rooms within the nursing house to ease wheelchair use. (Courtesy of Westminster Village North)

But critics argue that the cash move has not considerably improved nursing house high quality and has slowed adoption of neighborhood and residential well being companies.

More than two-thirds of Indiana’s Medicaid long-term-care dollars go to nursing houses, in contrast with the U.S. common of 47 %.

Joe Moser, who till May was Indiana’s Medicaid director, stated whereas in workplace that the hospital-nursing house marriages have been partly chargeable for maintaining extra folks in nursing houses. “It is a factor that has contributed to our imbalance,” he stated.

Daniel Hatcher, a legislation professor on the University of Baltimore and writer of final yr’s “The Poverty Industry,” stated this funding association is a nasty deal for the poor and undercuts the aim of the Medicaid program. “The state is using an illusory practice and taking away money from low-income elderly individuals who are living in poor performing nursing homes,” he stated. He famous Indiana is ranked close to the underside of states for nursing house high quality by a number of authorities and personal stories.

But proponents of the follow say that even when hospitals get many of the cash, it’s effectively spent.

Marion County Hospital and Health Corp., the massive safety-net hospital system in Indianapolis, owns or leases 78 nursing houses throughout the state, greater than another county hospital.

Sheila Guenin, vp of long-term care there, stated the hospital retains 75 % of the extra Medicaid dollars and the nursing houses get the remainder. Still, the extra cash has improved care. The switch of the license to the hospital has stored a number of nursing houses from closing and elevated staffing charges at many others, she stated.

About 40 % of the county hospital’s nursing houses have five-star scores from the federal authorities, up considerably from 10 years in the past, she stated. Among the enhancements on the nursing houses have been the addition of digital well being information in addition to high-capacity emergency mills to supply energy in case of a pure catastrophe.

Still, some affected person advocates stated the additional funding is flowing to hospitals and nursing houses with little public accounting. Ron Flickinger, a regional long-term-care ombudsman in Indiana, stated, “A lot of extra money is being spent here, but I’m not sure patients have seen it benefit them.”

A pair reads the paper in one of many frequent rooms on the Westminster Village North nursing house. (Courtesy of Westminster Village North)

Practice Dates To 2003

Medicaid, which generally covers about two-thirds of nursing house residents, is collectively financed by the federal and state governments. States pay not more than half of the prices, though the federal match varies primarily based on a state’s wealth. In Indiana the federal authorities covers about two-thirds of Medicaid prices.

The enhanced nursing house funds started in 2003 when a financially strapped Indianapolis hospital owned by the county took benefit of the Medicaid funding provision to bolster its backside line. In this case, the hospital bought a nursing house, then supplied the cash for the state to extend what it spent on the house to the federally allowed most.

That enhance, in flip, drew down extra federal matching funds. Since the federal remittance is bigger than the hospital contribution, the hospital acquired again its preliminary funding and divided the additional cash with the nursing house.

Other county-owned hospitals in Indiana slowly adopted go well with.

Hatcher stated Indiana authorities leaders embraced the funding association as a result of it allow them to keep away from the politically troublesome step of elevating taxes to extend state funding to enhance care at nursing houses. “It’s a revenue generator for the state and counties,” he stated.

All the Medicaid funding for nursing houses needs to be going to these houses to take care of the poor, not shared with hospitals to make use of as they select, he added.

The technique, promoted by consultants advising hospitals and nursing houses in Indiana, is used closely there due to the plethora of county-owned hospitals. But the federal authorities is tightening the principles about such funds.

Texas has secured Medicaid approval for the same technique beginning this month, however federal officers have made the additional funding depending on nursing houses assembly high quality measures, reminiscent of lowering falls. Oklahoma is seeking to get federal approval as effectively.

And in a rule launched final yr, the federal Centers for Medicare & Medicaid Services introduced that it will regularly drive states to shift to fee techniques that tie such reimbursements to high quality of care. Michael Grubbs, an Indiana well being marketing consultant, stated that rule doesn’t cease the Indiana hospital funding program, but it surely’s unclear that it’ll final.

Nursing house operators in Indiana say the financing association has helped them sustain with rising prices and enhance take care of residents.

Zach Cattell, president of the Indiana Health Care Association, a nursing house commerce group, famous the variety of nursing houses within the state incomes Medicare’s prime, five-star ranking has elevated 9 share factors since 2011. He stated the proportion of high-risk residents with strain ulcers and people bodily restrained additionally dropped considerably.

An Opportunity Or A Loophole?

In Indiana, the small, county-run rural hospitals typically should not going through the monetary risk that has change into frequent elsewhere, partly due to the additional Medicaid funding gained from shopping for nursing houses, hospital officers say.

“The money has meant a great deal to us,” stated Gregg Malot, director of enterprise improvement at Pulaski Memorial Hospital in northern Indiana. “I don’t see this as a loophole but see it as an opportunity for small rural community hospitals to improve our quality and access to care.”

His hospital is the one one in Pulaski County. The additional Medicaid income from buying 10 nursing houses statewide — about $2 million a yr — has helped finance the hospital’s obstetrics care and the acquisition of the hospital’s first MRI, so docs don’t need to depend on a cell unit that used to return twice per week, he stated. The hospital additionally spent a few of the funding so as to add a centralized telemetry unit to observe sufferers.

Steve Long, CEO of Hancock Regional Hospital in Greenfield, Ind., stated his hospital not too long ago constructed two health facilities within the county with assist from its additional Medicaid dollars. “This would not be possible without the additional funding.”

He rejects the notion that further Medicaid cash reduces the hospital’s incentive so as to add home- and community-based care in the neighborhood. He stated new Medicare financing preparations, reminiscent of accountable care organizations, give the hospital motivation to search out probably the most environment friendly methods to take care of sufferers after they depart the hospital.

But he acknowledged the hospital advantages from seeing extra sufferers go to nursing houses licensed below its identify.

“Welcome to health care — it’s a complex and confusing environment where we have all different competing incentives,” Long stated.

Cost and Quality, Health Industry, Medicaid, States

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