Washington state reimbursed nursing homes $100 million less than what it cost them in 2003 to care for elderly Medicaid patients, who account for more than two-thirds of their residents, the nursing home industry claims.


By reimbursing nursing homes at about 85 percent of the cost of care, the future of institutional elderly care in Washington already had been put in a challenging position before outgoing Gov. Gary Locke asked for an additional $75.2 million cut in nursing home Medicaid reimbursements in his proposed biennial budget that would go into effect July 1, the industry says.


There would not be a highway or bridge built in the state of Washington if the state only reimbursed those projects 85 percent of costs, says Bill Ulrich, owner of Consolidated Billing Services, a Spokane-based company that writes federal and state Medicare and Medicaid cost reports for 18 health-care facilities across the state.


Nursing homes in Spokane County are in a fiscal crisis, says Ulrich.


The rationale behind Lockes proposed $75.2 million cutback is that nursing homes are now reimbursed at 90 percent of capacity while the average census at Washington nursing homes is 82 percent, says Marty Brown, Lockes budget director.


The Washington Health Care Association will lobby the Washington Legislature this session to nullify the $75.2 million proposed cut and also will make more general efforts to upgrade the states Medicaid system, says Jonathan Eames, executive director of the association, which in based in Tumwater, Wash.


We are trying to at least make small gains to improve the system, he says.


Nonprofit nursing homes are reimbursed at the same level as for-profit facilities are, and the Lutheran run nonprofit Spokane Valley Good Samaritan Village, located at 17121 E. Eighth, loses $17 per Medicaid patient every day, says its administrator, Jim Droppers.


In addition to lobbying for help from the Legislature, the only options available to nursing homes to meet the crisis are to raise the rates that private-pay customers are charged and cut operational costs, says Eames.


Private-pay patients are those who use their own money to pay skilled-nursing facility charges, or are among the small percentage of patients who invested in long-term care insurance before entering a nursing home. They make up a small population in most nursing homes, typically about 15 percent, or about the same percentage as those insured by the federal Medicare program. It is not uncommon for private-pay patients to spend down their remaining assets while in a nursing home until they qualify for Medicaid coverage, says Eames.


A challenge


Reducing costs is difficult in an industry where 60 percent to 70 percent of all costs are labor related, says Ulrich. An additional problem is created by the shortage of nurses across the nation, creating an increasingly upward trend in health-care salaries.


Our wages never have competed with the hospitals, says Droppers.


Mike McCormick, administrator at Regency at Northpointe, a 115-bed skilled-nursing facility at 1224 Westview Court, in Spokane, says, We try to avoid raising rates, but we have to adjust for year-to-year increases in costs.


The financial problem is not new to the nursing-home industry.


Good Samaritan Village has been forced to downsize from a 201-bed skilled-nursing facility in 1993 to a 97-bed center today.


Droppers says Medicaid reimbursements have fallen short of costs the entire time hes been at Good Samaritan Village, which he joined in 1993, and have become increasingly worse in the past five years.


The industry thought it had made significant strides in the right direction two years ago when Washington state coordinated a fee program under which nursing homes would pay a fee based on their number of residents, then have those dollars matched by the federal government, says Eames.


All that money was supposed to be returned to nursing homes in the form of Medicaid reimbursements, but only half of that federal money earmarked for Washington nursing homes was passed through state government to its intended destination. Eames asserts that roughly $35 million in federal money was taken from the program and used for other needs.


The nursing home industry has said for years that Medicaid reimbursements have not kept up with the increasing costs of elderly health care.


Ulrich says Medicaid rates are determined by a complex formula that includes the providers geographical area, individual provider costs compared with a Medicaid price ceiling, and an inflation factor set by the Legislature.


The inflation factor hasnt kept pace with provider costs, industry experts say. Established on a base of 1999 industry costs, the inflation factor boosted reimbursement payments 2.1 percent in 2001, 2.3 percent in 2002, and 3.0 percent in 2003, says Ulrich.


That puts us way behind the 8-ball when the costs of workers compensation, health insurance, and the regular inflation rate itself are much higher, says Ulrich.


Eames, who spends much of his time lobbying legislators to improve the system, says, Nursing homes have the option to close their doors or struggle to hang on. He says 38 elder-care facilities in the state have closed in the past five years, leaving about 300 operating.


I dont want to say it, but it seems at times that we take better care of prisoners than we do the elderly, says Droppers.


A second local Lutheran-operated nursing home here, the 67-bed Mission Good Samaritan Center at 12715 E. Mission, closed last year, says Droppers.


Droppers doesnt foresee closing Good Samaritan Village. As a nonprofit, we will evaluate what we do, keeping our focus on our mission. We may have to look in other directions, but I think we will remain open.


Since 2001, four nursing homes in the Spokane area have closed, though St. Lukes Care Center at 222 E. Fifth later reopened as Spokane Veterans Home. There were 20 nursing homes in 2003 in the Spokane area, says Ulrich.