Medicaid cuts expected to force Hillcrest rate hike

McCOOK, Neb. — There was good news and bad news at the Hillcrest Board of Trustees meeting Tuesday morning.

The good news: Hillcrest Nursing Home recorded a profit for May, the fourth straight month in a row.

The bad news: room rates will probably increase due to a more-than-anticipated 7.1 percent reduction in Medicaid reimbursement rates. The decreased rates begin July 1. Last year, Medicaid reimbursement rates were decreased 2.65 percent.

Hillcrest is owned by Red Willow County but operates from its own revenue.

Board president Randy Dean estimated the decrease in Medicaid payments will result in about $185,000 per year in lost revenue, that could be made up if rates for private pay patients were increased by $20 per day. But that rate is too high, he said, adding “We just can’t do that.”

He agreed with Ron Ross, president of Rural Health Development, the management firm hired by Hillcrest, who said private pay patients shouldn’t have to shoulder the expense, but may have to anyway.

“This isn’t right ... that these people should have to pay,” Ross said at Tuesday’s meeting. But there didn’t seem to be an area to cut costs, he told the board. “Who are we overpaying? The RNs? I don’t think so. The nursing aides? I don’t think so. Dietary, housekeeping? I don’t think so.”

Ross will bring a recommendation for room rate increases to the board in August for its approval. That way, he can see how the reduced Medicaid rate is affecting revenue in July and have a more realistic picture to work from. The last room rate increase for private pay residents took effect in November 2017.

By law, residents must have 60 days' notice of rate increases.

The decrease in reimbursement rates will most likely affect smaller nursing homes the most, Ross said, where there are fewer beds and Medicaid makes up the majority of their revenue. At Hillcrest, about 65 percent of its residents are Medicaid, Ross estimated, the rest private-paid or Medicare. As of Tuesday, there were 91 residents in the 100-bed facility.

Medicaid is a program that provides medical insurance to groups of low-income people and individuals with disabilities. It’s funded one half by federal money and half with state funds; for every dollar the state spends, the federal government matches it with $1.08, according to the Kaiser Family Foundation.

In 2016, Medicaid spending in Nebraska was $2 billion.

In contrast, Medicare is a short-term retirement program for people who paid into the system via their employment and pays for short-term skilled care. After Medicare and private resources run out, Medicaid steps in.

Ross told the board that he and others involved in long-term care have been trying to work with state senators so long-term care facilities can have its own budget, instead of being lumped in with other Medicaid programs. This included letters to State Sen. Dan Hughes of District 44. According the reply read by Ross at the meeting, Hughes cited the poor ag economy that has led to cuts in Medicaid, as well as to the University of Nebraska college system and to K-12 education.

Medicaid is administered by the Nebraska Department of Health and Human Services. Ross knows how the system works: he was the director of DHHS for five years beginning in 1996 and later served as the Nebraska state treasurer when the then-treasurer resigned.

Ross encouraged board members, as well as families of private pay residents, to contact their state senator with their concerns on Medicaid cuts. “Private pay folks should be saying, ‘What is this?’” he said about the decreased Medicaid.

“We have to do something, this isn’t right,” he continued. “Our world is taking care of the generation of people that made Nebraska great.”

As for the budget, Hillcrest recorded $72,000 in the black last month, according to Renee Wright, Hillcrest business manager. High census counts helped, Ross said, commending department heads, such as the dietary department, for keeping costs under budget despite a higher census.

The facility is projected to show a profit this year, Ross continued. Don Harpst, former Hillcrest administrator, also reminded the board that the Hillcrest Foundation helped in that, by donating around $100,00 for various projects. Dean agreed, noting the Foundation helped in capital purchases, such as roofing repairs and the new whirlpool.

The board approved a preliminary budget Tuesday morning, that included the decreased Medicaid rates and projected employee salary increases. Voting in favor were board members Dean, Mike Skolout and Ann Barger. Not voting were Jim Howard, who was absent from the meeting and Mike Eklund, who had to leave early.

Red Willow County Commission Jacque Riener told the board that the county needs a budget from the facility as well, but it must be a budget based on revenue as if the facility is at capacity, because “if the county doesn’t budget it, we can’t spend it,” she said. By state law, funds not included in the budget can’t be spent, so this “fairy tale” budget, as Riener called it, allows the facility to use the all the funds it generates.