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N.H. Nursing Homes Face Challenges

Low Medicaid Payments Put Pressure on County Facilities

  • Nurses Theresa Ferran, left, and Angela Brodeur talk with Judy O’Connor after helping her into her bed at the Sullivan County nursing home last week. (Valley News - Jennifer Hauck)

    Nurses Theresa Ferran, left, and Angela Brodeur talk with Judy O’Connor after helping her into her bed at the Sullivan County nursing home last week. (Valley News - Jennifer Hauck) Purchase photo reprints »

  • Purchase photo reprints »

  • Sullivan County nursing home roommates Virginia Severance, left, and Jessie Snedeker chat while the floor is cleaned in their room. (Valley News - Jennifer Hauck)

    Sullivan County nursing home roommates Virginia Severance, left, and Jessie Snedeker chat while the floor is cleaned in their room. (Valley News - Jennifer Hauck) Purchase photo reprints »

  • Mary Currie does word puzzles in her room at Sullivan County Health Care in Unity. (<br/>Valley News - Jennifer Hauck)

    Mary Currie does word puzzles in her room at Sullivan County Health Care in Unity. (
    Valley News - Jennifer Hauck) Purchase photo reprints »

  • At the Sullivan County Health Care facility in Unity, housekeeping employee Tonya Herschel scrubs the floor along the corridor. (<br/>Valley News - Jennifer Hauck)

    At the Sullivan County Health Care facility in Unity, housekeeping employee Tonya Herschel scrubs the floor along the corridor. (
    Valley News - Jennifer Hauck) Purchase photo reprints »

  • Nurses Theresa Ferran, left, and Angela Brodeur talk with Judy O’Connor after helping her into her bed at the Sullivan County nursing home last week. (Valley News - Jennifer Hauck)
  • Sullivan County nursing home roommates Virginia Severance, left, and Jessie Snedeker chat while the floor is cleaned in their room. (Valley News - Jennifer Hauck)
  • Mary Currie does word puzzles in her room at Sullivan County Health Care in Unity. (<br/>Valley News - Jennifer Hauck)
  • At the Sullivan County Health Care facility in Unity, housekeeping employee Tonya Herschel scrubs the floor along the corridor. (<br/>Valley News - Jennifer Hauck)

Unity — Most of the patients who stay at Sullivan County’s nursing home are not wealthy and depend on government insurance programs to live there, but Ted Purdy has found a way to provide a few luxuries.

Recent renovations have added small kitchen areas that allow staff to serve food in steam trays, which keep meals warmer than was previously possible. Portions of the complex have received fresh coats of paint and a year and a half ago, the roughly 140 patients enjoyed air conditioning for the first time.

Purdy, who is the administrator, has managed these costs while keeping the nursing home on budget. This is no small accomplishment. More than three-quarters of his patients are on Medicaid, the state-run federal program for people who can’t afford health insurance. It is a program that is chronically underfunded in New Hampshire and does not come close to covering the true cost of care.

“Every nursing facility has a shortfall because the Medicaid does not cover costs,” Purdy said at the facility on Monday afternoon.

New Hampshire has the distinction of being one of the stingiest states in the nation when it comes to disbursing Medicaid money, per patient, to nursing homes relative to the costs for providing care. A report released by the American Health Care Association found that New Hampshire’s Medicaid program pays, on average, $179.66 a day for every patient treated in the network of county and privately run nursing homes. The actual average cost to provide care is around $237, which amounts to a $57 daily shortfall for every person.

Not every state provided Medicaid data for the report. But of the 38 states included, just two — Michigan and North Dakota — paid nursing homes enough to cover actual costs. Vermont underpaid by an average of $23.68 per patient, which is about the national average. New York had the second greatest disparity with a $46.39 daily shortfall per patient. New Hampshire, however, was by far the worst.

Nursing home administrators such as Purdy have tried to make up some of the shortfall through cutting costs and running efficient operations. But those measures only go so far. Some nursing homes cover the gap by making adjustments to staff or the rates that private insurance pays.

“If there are huge cuts in the Medicaid budget, it’s a business, and you have to make ends meet without cutting services,” said Martha Chesley, administrator at Genesis Health Care, which has 110 patients in Lebanon.

For county-run facilities, the shortfall has to be made up another way. Medicaid patients make up three-quarters of the population residing in the county nursing homes in Grafton and Sullivan counties. Only a small percentage of patients have private insurance, so raising rates wouldn’t have much of an impact.

“For the county facilities, (the shortfall is) made up through taxpayers,” Purdy said.

The pressures on nursing homes, and on the insurers and taxpayers who help support them, could get worse as seniors become a larger portion of Granite State residents. Cuts in Medicaid reimbursement rates have added further strain, and there is uncertainty around the role nursing homes will play in caring for the elderly as the state moves toward a managed care model for the program.

All of these factors have raised serious questions for nursing homes, how they are funded and what the demands will be for their services in the future.

“We’re absolutely concerned,” said Greg Chanis, county manager in Sullivan County. “Nobody knows what it means.”

A Funding Challenge

The county nursing homes in Grafton and Sullivan counties both have funding shortfalls in the millions of dollars.

Sullivan County’s nursing home has a budgeted revenue shortfall of $2.35 million this fiscal year. Revenues for the Grafton facility, which has 135 patients, are $4 million less than expenses.

Those shortfalls aren’t entirely made up through county taxes, and so it’s difficult to know the exact impact on property owners, said Julie Clough, the executive director of Grafton County. But it’s safe to say that providing nursing home care is expensive.

In Sullivan County, 17 percent of county tax revenue goes to the nursing home, said Chanis.

The burden on counties to pay for nursing care is a complicated matter.

Half the money for the Medicaid program is provided by the federal government, which is then matched by the state. The program is administered at the state level.

But when it comes to nursing care, the state’s portion is actually paid entirely by the county.

The state and county used to share the burden, but in 2007, lawmakers changed the rules. The entire portion of the state’s Medicaid obligation for nursing home care would be shouldered by the county. In exchange, the state would take on a few responsibilities the county used to bear, such as paying for juvenile services.

It wasn’t exactly an even trade, said Betsy Miller, executive director New Hampshire Association of Counties.

“The senior population is growing so dramatically. The federal Census predictions have the over-65 (population) in New Hampshire doubling from 2010 to 2030. Doubling,” she said. “And the juvenile population … is going way down. The number of kids in the state is going down.”

By 2030, nearly half a million New Hampshire residents will be 65 or older, representing almost one-third of the population, according to a report from the New Hampshire Center for Public Policy Studies. And the burdens on both Medicare, the government insurance program for seniors, as well as Medicaid are going to grow.

In 2011, Medicaid allocated 25 percent of its total medical spending to those over 65, according to the report. Assuming no significant changes to the services provided to that population, that percentage will increase to 52 percent by 2030.

Already, however, the state doesn’t set aside enough money for nursing homes, Miller said.

“The cost of doing that (nursing care) business is way beyond what the state has appropriated,” she said.

The total Medicaid funds budgeted for nursing home level care is around $180 million a year, Miller said. This is the entire bundle of money, the state’s portion and federal portion, that it believes will be spent.

The nursing homes then bill Medicaid for a variety of allowable services. If those costs are higher than what was budgeted, however, then the state makes adjustments. That is, it cuts the amount of money it will actually pay nursing homes. “In other words, they get billed and go, ‘uh oh. We may be running like 10 or 20 percent over this dollar,’ ” Miller said. When that happens, the state takes what money it has available and spreads it thinner.

So, in Sullivan County, even though the state budgeted $202 per patient in daily allowable expenses, the nursing home gets paid only $145.64, said Purdy.

The Grafton County nursing home gets slightly more money, $152.41 per patient, but then it costs more to treat the mix of patients housed there, said Craig Labore, the nursing home’s administrator. The actual daily cost to provide care at the Grafton County home is $290.25 per patient, he said.

“It’s difficult, but for us, being a county facility, we’re kind of the home for those without the means to go to a private facility or get the care they need from a home,” Labore said.

No one from New Hampshire Department of Health and Human Services was available last week to explain why the state’s Medicaid program has these shortfalls.

As for whether the burden should be on the state to make up the difference, or on county taxpayers, Chanis said, it may not make much of a difference: The money will have to be raised somehow, whether through a county tax or statewide.

“The reality is that someone is paying for all this stuff,” he said. “If the cost is what it is, taxpayers are paying for that. It’s just a matter of where it ends up.”

A Changing Model

New Hampshire is in the midst of moving its Medicaid program over to a managed care model, in which third-party organizations coordinate care within a defined network of providers.

Other states have managed care Medicaid programs, although many do not include long-term nursing care as part of it. New Hampshire, however, is including Medicaid nursing care in its managed care program. Nursing home administrators have been wondering how they will be affected.

Nursing care is expensive, more so than assisted living and other less-intensive options. As the managed care companies look at ways to do more with limited Medicaid funds, there is likely to be a push to keep people out of institutions, Purdy said.

The state “certainly wants to put people in the least institutionalized, the least restrictive environment,” Purdy said. “There is a push for more community-based care, assisted living.”

Such a push is not a bad thing, said Mohamed Ally, president of Meridian Health Plan, one of the three managed care companies chosen by the state to run Medicaid.

Finding ways to care for people in their homes or in less intensive institutions would not only be cheaper, he said, but will be a better experience for the patients. “We tend to get into the dollars, but I still don’t hear the voices of the patient. Where is the quality?” he asked.

Sometimes, patients need to be in the kind of institution that can provide 24/7 attention. But there are also people who can stay home with someone who would be willing to provide that care.

Some of the Medicaid money that’s going to nursing homes might be used instead to compensate family members of the patient who, with the proper training, would be willing to care for a person at home. “What are we doing to put customized arrangements so that Mom, Dad or grandma or grandpa, can get the care they need in the home setting?” he said.

No one is arguing that nursing care will not still be needed, and all three managed care companies that operate in the state have been meeting with nursing home administrators around the state as New Hampshire prepares to roll out the new managed care arrangement.

Well Sense Health Plan and Granite State Health Plan are the other two companies chosen by the state to handle managed care.

The details are still being fleshed out about how nursing home care will be affected, said William Brewster, medical director for Well Sense. But he said the company plans to work with nursing homes as those questions are worked through.

“I can say on behalf of Well Sense Health Plan that we welcome the opportunity to partner with providers of nursing home care to our future New Hampshire members,” Brewster said in an email. “We have had and will continue to have constructive discussions with state and county organizations representing the industry, and we will continue to be engaged with the Department of Health and Human Services as the details of the program come into focus.”

There are also larger questions that go beyond the New Hampshire health department. The state has new political leadership, and no one knows exactly how these new faces in Concord will proceed on Medicaid.

“It’s a whole new government and governor,” said Chesley, of Genesis in Lebanon. “Everyone’s sitting on the fence post waiting to see where things will go.”

Chris Fleisher can be reached at 603-727-3229 or cfleisher@vnews.com.