Quincy News

Illinois nursing homes in crisis, citing payment delays, shortfalls

Steve Dean, mayor of the 3,500-population McLean County city of LeRoy, stands on the grounds of the now-closed LeRoy Manor and Liberty Village nursing home, which provided care for his aunt in her final days. The facility is one of 20 state-licensed nursing homes that have closed due to the state’s poor Medicaid reimbursement rates since 2014. (Capitol News Illinois photo by Jerry Nowicki)
By Herald-Whig
Posted: Apr. 20, 2019 10:50 pm Updated: Apr. 20, 2019 10:59 pm

SPRINGFIELD, Ill. -- Since March 2014, 20 state-licensed skilled-care nursing homes in Illinois have closed for financial reasons, while many of those continuing to serve the state's neediest elderly populations face staffing shortages and operating deficits caused by diminishing state government investment.

Nursing home advocates warn that the industry is already in crisis, and this continuing trend could diminish the care available for Illinois' aging population within a decade.

"These facilities are closing, and I can tell you more are going to close," said Pat Comstock, executive director of the Health Care Council of Illinois, a nursing home advocacy group. "It's happening because we have a situation in Illinois where they can no longer financially survive."

The pace of closures has quickened in recent years, with five skilled-care nursing facilities those that house the sickest and most vulnerable closing from 2014 to 2016, six closing in each of 2017 and 2018, and three already shutting their doors in 2019, according to the Illinois Department of Public Health.

An 85-page report commissioned by HCCI states Illinois' Medicaid ranks 49th in the nation for Medicaid reimbursement rates, and nursing homes lose approximately $15,000 per year or an average of $41 per day for each Medicaid-funded patient. Those shortages create a $649 million single-year funding shortfall across the industry in Illinois.

Comstock said facility closures take a human toll affecting communities across the state.

"One of the really sad things about this is that when you close facilities, you create access problems for the elderly and you create additional challenges for families," she said. "And also, we know that when the elderly who are very sick, if they get displaced or moved to another location, it's really difficult on them and some of them just don't survive that displacement."

Far behind neighboring states

The senior advocacy group AARP detailed in its own report earlier this year that Illinois nursing homes have the worst patient-to-staff ratio in the nation, leading to the second-worst rate for administering antipsychotic drugs to sedate patients without a psychiatric diagnosis.

"Inadequate staffing at many Illinois nursing homes leaves residents neglected, malnourished, suffering from bed sores or worse," said Ryan Gruenenfelder, director of advocacy and outreach for AARP.

The poor staffing ratio persists despite state mandates on minimum hours of care per patient at state-licensed nursing facilities. Senate Bill 1510, which passed the Senate by a 39-19 vote on April 10, would require informed consent if an antipsychotic drug is to be administered, and would establish fines for nursing homes which fail to meet mandated staffing levels.

But the HCCI said the legislation fails to address the root cause of staffing shortages.

"Medicaid rates have failed to keep pace with the actual cost of care in Illinois," said HCCI Vice President Amanda Ginther, adding that a statewide worker shortage also makes it difficult to fill staffing positions.

The state provides 27 percent of funding for the approximately 740 intermediate- and skilled-care homes it licenses. The facilities themselves provide 23 percent of their funding through a pair of taxes on beds, which legally cannot be passed on to residents. The federal government provides the other half of funding by matching state and provider contributions.

But the state's share of the funding is shrinking, because Illinois' structural reimbursement rate remains stagnant each year, as it is based on years-old market costs for nursing (2014), support (2004) and capital (1999) expenses.

"As a result, Illinois also has the lowest average total direct hours per patient day at 3.4169 hours. Providers in the state cannot afford to provide the staffing levels that providers like those in Michigan can afford," the report said.

Like all state-funded entities, nursing homes were adversely affected by a multi-year budget impasse which included a temporary funding cut executed by former Republican Gov. Bruce Rauner's administration in 2015.

"We never really recovered from that," Comstock said.

"Incredibly sick, fragile people"

Historically, the losses incurred by caring for Medicaid-dependent patients have been at least partially offset by private payers living at the same facility. But the number of those patients living at nursing homes is shrinking.

"Nursing homes are no longer like the old age homes that one would think of, they're no longer grandma in the corner knitting and grandpa playing pinochle with his buddies," Ginther said. "They're incredibly sick, fragile people that require medically complex care around the clock."

In recent years, Illinois has promoted nursing home alternatives such as aging-in-place programs, and seniors often stay in their own homes or move to lighter care facilities until their health deteriorates to a point that they need nursing home care.

While the HCCI supports age-in-place programs, the shift to a more Medicaid-dependent population in many nursing homes means an increase in homes operating at significant funding deficits.

In 2016 alone, nursing homes where more than half the patients are covered by Medicaid each lost, on average, $765,000 the report stated.

"This shows that even contribution margins from private, Medicare, and other payers cannot fully subsidize Medicaid losses," the report said.

The state's recent minimum wage increase to $15 per hour by 2025 will add another burden to cash-strapped homes, Comstock said, although the HCCI did not oppose the measure because it believes increased wages will lead to enhanced care.

Bureaucratic delays

According to the HCCI report, the financial strains of Illinois' poor Medicaid funding rates are compounded by bureaucratic reimbursement delays.

It is "not uncommon," the report said, to find high Medicaid facilities with 40 percent or more residents in pending status due to delays in the state's processing of long-term benefits applications. During this period, the care provider must cover all costs.

"We're in situations where we've been providing care for years without any compensation," Comstock said, adding that legislation recently passed to expedite application processing has not yet yielded satisfactory results.

Reimbursement delays have also become more prevalent since the state adopted a privatized Medicaid managed care system in 2011, the report said.

That system uses private insurance companies known as managed care organizations, or MCOs, to coordinate each patient's care. The state releases funds to MCOs at a statute-specified daily rate, and they pass it on to nursing homes that apply for reimbursement for the Medicaid-covered care they provide.

But according to a report from Meredith Duncan, one of the state's leading legal experts on managed care, provider claims are often denied or delayed without explanation, and MCOs often refuse to pay state-mandated late payments. Often, Duncan said, the provider's only recourse is a time-consuming legal process that often costs more than the amount recovered.

The implementation of managed care also removed a critical safety net for cash-strapped nursing homes the ability to apply to the state comptroller's office for hardship funding payments. Without that, providers awaiting payment are often forced to take out costly bridge loans just to make payroll.

State Sen. Jil Tracy, R-Quincy, has stepped in to help nursing homes get payments dating back as far as 2007, when she was in the Illinois House. She has seen some of the smaller, rural homes, close and has done what she could to prevent closures.

"Over the years, our office has requested many hardship payments when a facility was facing not being able to make payroll. The comptroller would then move the payment up in the queue. Also, we've made many calls on behalf of nursing homes to find the status of the payment so they could better plan finances based on that status," Tracy said.

Preventing collapse

All of those factors have the industry worried about its sustainability as Illinois' elderly population is set to triple in the next 30 years.

"I think a really big concern is that the destabilization of nursing homes in general is really going to put us in a difficult position when the baby boomers start to age into the system of needing more long-term care," Ginther said. "We're not going to have the long-term support available for them."

The HCCI has proposed a series of legislative fixes, the cornerstone of which is a $100 million increase in state funding to skilled- and intermediate-care nursing homes for the upcoming fiscal year. The federal government would match that number, bringing the total added investment to $200 million.

The HCCI is optimistic about that request, as Democratic Gov. J.B. Pritzker's proposed budget includes an estimated $390 million in added revenue from a tax on MCOs which would bring more money into the Medicaid system.

Harston said MCOs are working with the state on the MCO tax proposal in an effort to "continue to stabilize the Medicaid program."

Senate Bill 42, carried by Oak Park Democrat state Sen. Don Harmon, passed committee unanimously as a vehicle to distribute the added funding. It will be amended once it is known if any new funding will be realized, Comstock said.

The $200 million, however, would make up less than one-third of the anticipated $649 million one-year industrywide funding shortfall.

"All that $200 million is really going to do is keep our infrastructure from falling apart," Comstock said. "So we've got to continue to work with Illinois to revamp the system and create a reimbursement methodology that allows our services to the frail elderly in Illinois to be sustained. So this is just the beginning for us."

Herald-Whig Senior Writer Doug Wilson provided some information for this story.

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