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Continued Medicaid Shell Game

Here we go again, another round of the bi-annual Medicaid shell game to theoretically increase Medicaid SNF rates in Wisconsin.  If you aren’t familiar with this trick, watch closely because the moving parts are designed to confuse you – hence the illusion. 

The trick starts with the State having a continuing budget deficit overall.  Don’t be confused by the Governor’s rhetoric regarding the economy being principally behind this enormous deficit as it has been present for quite some time, albeit perhaps a bit higher now due to the economic slow-down and the continued, escalating pace of statewide spending.

The next part of the trick is a bit more subtle; the Medicaid program’s deficit is woven in as part of the discussion.  Yes, within the enormity of the State deficit is the Medicaid’s program deficit – also not new.

Here comes the meat of the trick.  The State wishes to increase the Medicaid bed tax “again” in order to create additional federal matching dollars to fund a Medicaid rate increase which isn’t really a rate increase at all, calculated to be approximately 2%.  The illusion comes in with the tax increase which is greater that 2%, a de facto 100% increase over the present bed tax.  Where the shells get moved and the slight-of-hand occurs is when the State openly admits that it will likely skim a portion (probably sizable) of the dollars gained via the federal match (plus potential stimulus money) to fund other deficits not necessarily tied to the Medicaid SNF formula, perhaps within other areas of the program or broader within the totality of the State black hole.

Still don’t see the trick or the illusion?  There is more to follow.  At the same time the State is asking to raise the bed tax to fund the rate increase that won’t really be an increase and to skim some of the federal matching dollars for other uses, they are looking to cut $415 million in expenditures from the Medicaid program, no doubt within the SNF/Long-term Care arena as well as other Medicaid programs.  In addition, the State is proposing increasing survey and certification fees, license fees and other fees for SNF providers. 

Confused yet?  Looking to find out how this shell game ends up?  Alright, I’ll play the role of Penn and Teller and debunk the illusion but I caution the reader, the “unveiling” may not lead to clarity.

  • Jumping the bed tax to gain 2% in the Medicaid rate doesn’t produce any real rate increase for the SNF providers.  In fact, only those providers that have a disproportionately high Medicaid census would stand to see any “net gain” from the increase.  For example, a provider with a 40% Medicaid census will pay more in “bed tax” dollars than reap in new Medicaid dollars via the rate increase.  In simpler terms, the outflow is far in excess of the inflow.
  • Medicaid rates are not full rates in the first place.  Patients/Residents have a co-pay or liability if you will, typically based on their Social Security and other income.  If this income as it traditionally does, inflates at a rate equal to 2% or more, the Medicaid increase that is supposed to theoretically be realized by the provider is effectively offset or diminished greatly by the rise in the liability of the individual resident or patient.  Bottom-line: while the new ‘rate” may be reflected as 2% higher, it isn’t being paid by Medicaid, likely by the patient himself or herself.
  • Raising the bed tax dramatically shifts additional costs to the resident/patient as I am unaware of any facility that can afford to “assume” the increase without passing it on.  Raising the tax will only serve to diminish funds of current residents/patients “quicker”, pushing them toward Medicaid faster.  This is the cruel irony of this whole illusion and the most insidious part of these “dumb” proposals.
  • Rates, fees, and all other regulatory costs are going up – not reflected in the Medicaid increase.  Net these increases against the Medicaid 2% increase and the increase will likely be closer to zero and certainly, not 2%.  In simpler terms, if the government gives you a $1 to pay for addiitional costs but takes a new quarter for your license, a dime for something else and a nickel for another something else, you didn’t really get a whole “dollar”.

The encore that Wisconsin wishes you to continue to watch year in and year out, in spite of the ludicrosity of the shell game is the actual Mediciad SNF program itself.  For years, Medicaid rates have produced deficits in Wisconsin nursing homes.  The care costs substantially more than the program pays for and the bed tax has only hastened these deficits.  The program is so inadequate that for facilities that take care of a disproportionate share of Medicaid residents, closure has become the refrain within the industry.  For facilities that can manage to maintain a workable payer mix, bed reductions and overt payer discrimination has become the modus operandi.  Frankly, it is time for this “show” to close for good as the reviews stink, the trick is old and the players are getting dated.


March 30, 2009 - Posted by | Health Policy and Economics

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