Nursing facility rates proposed for FY 2008; thoughts on alternative care settings

CMS announced proposed nursing facility rates for FY 2008 yesterday.  The rule went on display and should be published in the Federal Register May 4.  The rule includes an increase of 3.3%, or $690 million, over 2007 rates.

Massachusetts Medicaid rates for nursing facilities may be getting a bump up as well.  The Massachusetts House of Representatives authorized an $80 million lift (a 4% increase if applied evenly across the board) and rejected a bid by Governor Deval Patrick to reduce payments to facilities for days of service provided to residents deemed "community-eligible."  State budget deliberations now move to the Senate.

The question remains whether these rates fully reimburse nursing facilities for their reasonable costs.

Erosion of nursing facility capacity will continue as the states continue to push for provision of services in a community setting.  While that is appropriate for some nursing facility residents, there will always be some residents who require nursing facility services.  There are initiatives under way to ensure that the nursing facility experience is as beneficial as possible for residents (consider the Green House initiative; see my earlier post on the subject here).  Furthermore, as the push to community settings continues, some states, including Massachusetts, have recognized the importance of ensuring access to Mediciaid reimbursement for the costs of services, regardless of the care setting.  Previously, some residents were "stuck" in nursing homes because the cost of their community-based care would not have been covered by Medicaid.  Today, equal choice laws (see the Massachusetts law and related press release), implemented under Section 1115 waivers ensure the availability of more appropriate care settings and may serve to defer institutionalization of frail elders. 

Update 5/3/07: See the Garlo Ward post on the long term outlook for long term care providers.

— David Harlow