Medicaid enrollment in Virginia has jumped by almost 50 percent in the last 10 years — despite the state having some of the strictest eligibility criteria in the nation for the federal/state health program. Paying for it takes up a major chunk of the state's budget each year.
It came as no surprise then to health-care providers that Gov. Bob McDonnell's proposed 2012-2014 budget seeks to trim the state's Medicaid spending.
"It's one of the biggest ticket items. We understand it's one of the first places they look," says Steve Morrisette, president of the Virginia Health Care Association (VHCA). The association's membership includes long-term care facilities and nursing homes that stand to take a big hit from the proposal to withhold annual inflation adjustments (typically 4 percent) in a $417 million "targeted savings strategy."
The trend — it comes after four years of no reimbursement increases — has many in the industry deeply concerned. Along with long-term care facilities which typically have large numbers of Medicaid patients, Children's Hospital of the King's Daughters in Norfolk reported that 57 percent of inpatient days were covered by Medicaid last year.
"What's concerning to us is that costs of care continue to rise. If reimbursement stays flat it increases the challenge of providing care to every child that needs it," says hospital spokeswoman Ridgely Ingersoll, noting that in the fiscal year that ended June 2010, the hospital had a $9 million Medicaid shortfall.
Such shortfalls are routine for Medicaid providers. Katharine Webb, a vice president with the Virginia Hospital & Healthcare Association in Richmond, which represents hospitals in all the local health systems, says that last year Medicaid paid, on average, 64 cents for every dollar of inpatient cost. Under the new proposal, payment would fall to 60 cents on the dollar. "That is very, very difficult for some hospitals," says Webb, adding that rural hospitals also tend to be harder hit. The effect will also extend to the teaching hospitals where indigent care is part of their mission. "It will have a dramatic effect on them," she says.
Currently, nursing homes lose between $13 and $16 per day for every resident on Medicaid, says Webb. In the past these losses were commonly offset by short-term rehab patients using Medicare. In October, the federal government slashed Medicare reimbursements by 11 percent, and there are further cuts pending in the mandates that went into effect when Congress failed to meet agreement on the deficit.
"It makes it that much more difficult to deliver great care," says David Abraham, executive vice president of Beth Sholom Home in Virginia Beach, where 50 percent of residents receive Medicaid.
In all, Medicaid recipients account for 61 percent of Virginia's 29,000 nursing home residents, according to the VHCA's Morrisette, who's committed to fighting the proposed budget.
"We will be talking with the General Assembly to change some of the governor's priorities. We have the sickest of the sick. They require 24/7 care. There's no alternative for them," he says, noting that many have a mistaken view of Medicaid recipients in long-term care facilities. "They've worked all their lives and then they get sick. They've had to spend through their resources and impoverish themselves. They give up their Social Security and their pensions," he says. Only then does the state kick in with Medicaid payments, which Morrisette estimates at $20,000 a year rather than the $60,000 for private-pay nursing home residents.
After four years of no raises, during which facilities have delayed maintenance needs and cut costs on every front, he says, "There's nowhere else to squeeze. We're going to have to start laying off important caregivers. I'm concerned that we won't be able to maintain staff levels. It's a very difficult job."
Morrisette believes that earmarking an additional $10 million for Medicaid in the state's budget would make a tremendous difference as it would automatically provide $20 million for providers through federal matching funds.
"It's not a huge ask from a budget of $85 billion," he says "We've been good citizens and absorbed the pain. Our rainy day is right now."
Gov. Bob McDonnell's proposed 2012-2014 budget calls for withholding annual inflation adjustments for Medicaid reimbursement for a targeted reduction of $417 million in state spending over the biennium. Medicaid providers in Virginia are currently in the fourth year without raises; costs are estimated at rising 4 percent per year for long-term care, 9 percent for the overall program.
The Medicaid program involves federal/state matches based on the state's per capita income; in Virginia, which ranks in the top 10 states for income, the state matches federal funds on a 50/50 basis ( in neighboring North Carolina, the state contributes just 33 percent). Therefore, for every dollar Virginia cuts from Medicaid support, the provider loses $2.
Those facilities most affected are those with the highest number of Medicaid patients, such as nursing homes and long-term care facilities. Also, Children's Hospital of the King's Daughters in Norfolk, the region's only dedicated pediatric hospital, has a large number of Medicaid patients.
Who qualifies for Medicaid?
Who qualifies for Medicaid?
Eligibility is primarily for low-income children, pregnant women, the elderly, people with disabilities, and parents meeting specific income thresholds. In Virginia, 56 percent of recipients are children, 20 percent disabled, 16 percent adults and 8 percent the elderly. Seniors and individuals with disabilities account for the majority of Medicaid spending.