October 18, 2000

To: Interested Legislators


Subject: Responding to DHFS Nursing Home "Fact Sheet"

Your office should have received a September 20, 2000 memo from Department of Health and Family Services Secretary Joe Leean concerning Medicaid reimbursement for nursing homes.

Before responding to the individual bullet points the Secretary presented, we would like to offer the following general comment:

“Medicaid paid $903,000,000 (all funds) to nursing homes in 1999.”

“Wisconsin had approximately 30,000 Medicaid residents in 1999."
“Approximately 8,400 nursing home beds are empty in Wisconsin.” “Wisconsin Medicaid rates are 28th highest in the country for 1998.”

“Wisconsin’s Medicaid rates for nursing homes are higher than Michigan, Indiana, Illinois, Missouri and Nebraska in the Midwest.” “Forty-eight nursing homes in Wisconsin (out of a total of 442) are currently in receivership. Forty-four of those homes are part of corporate chains and 34 of those homes are part of national chains that have filed for Chapter 11 bankruptcy.”

“The Medicaid nursing home rate has received larger increases in the last two budgets than other Medicaid providers.”

What is the Funding Solution we seek?

We need State Legislators and the Governor to support, at a minimum, funding necessary to raise the Wisconsin Medicaid nursing home payment system to a level comparable to other states.*

The BDO Seidman study indicated the current year cost of improving Wisconsin’s nursing home payment system to a level comparable to that of other states would be approximately $32 million GPR ($80 million all funds). For the 2001-2003 biennium, the cost of achieving a comparable funding system and providing a 4% annual inflationary increase (necessary to avoid a fiscal deterioration of this comparable system) is projected to increase this cost to $48.7 million GPR in 2001-2002 and $65.4 million GPR in 2002-2003.

It must be noted that this new funding system would not be ‘generous” by any standard. It is equitable, given the payment levels established by many other states. Even under the new system, 40% of Wisconsin nursing facilities would continue to sustain Medicaid losses (compared to 83% presently).

This funding increase would address nursing facilities’ existing structural deficits (i.e., the growing gap between necessary costs and inadequate Medicaid payments), but would not directly address efforts to raise staffing levels to the optimal levels identified in a recent federal HCFA study, substantially increase wages and benefits, or fund a new Medicaid payment system based on resident classifications similar to the Medicare prospective payment system.

*The BDO Seidman study proposes modifying the Wisconsin payment system to one with three main cost centers (direct care, support/indirect care, and property) plus a pass-through of property taxes. Ceilings for direct care and support/indirect care would be set at 15% and 10% above statewide medians, respectively. The property payment would be increased from 7.5% of facility value to 9.5%. Under this proposal, 60% of the state’s nursing facilities would get their Medicaid-incurred costs paid.

The Wisconsin Health Care Association (WHCA) represents 250 for-profit, not-for-profit, a nd government-operated nursing facilities. The Wisconsin Association of Homes and Services for the Aging (WAHSA) represents 198 not-for-profit and government-operated facilities. (Some facilities belong to both organizations.) For more information, please contact Tom Moore at WHCA (608-257-0125) or John Sauer at WAHSA (608-255-7060).

Wisconsin Association of Homes and Services for the Aging
204 South Hamilton Street Madison, WI 53703
Telephone: (608)255-7060 FAX:(608)255-7064