Managed Care in New York State – A dive to the bottom for the Nursing Home Industry?

Managed Care in New York State

With pressures mounting on the New York State Medicaid budgets, the Governor and Department of Health are looking towards Managed Medicaid to control escalating Medicaid costs. From a budget perspective, limiting the State’s exposure to uncontrolled utilization and fee for service reimbursement is a reasonable choice. However, when viewed from a nursing home provider’s perspective, placing a layer of management between the State (who sets the rates, processes the checks and surveys the Facility’s to ensure compliance) with little or no ground rules, will simply reduce reimbursement in general as well as create incentives that promote the lowest cost provider (and possibly lower care) in order to meet the goals of a managed long term care plan. We examine the issues that could create a price war between Facilities, not to the betterment of our residents, their families or our Staff.

In the general population, the addition of care coordination and care pathways can easily be implemented in a mobile population in a Community setting with a reasonable expectation that quality of care will increase while costs will decrease. These are all natural results of decreased duplication, decreased utilization and decreased use of emergency room and/or hospitalization. One might even postulate that, in the Community setting, the more the complex the care, the greater the enhancement in care outcomes and decrease in costs. This is not true for a long term care population whose care is already “managed” within a nursing home.

Managed Care started in the 1970’s in an effort to control health care costs. As we all know, since that time, health care costs have continued to spiral out of control under a health care system which lacks proper reimbursement for preventative care, provides incentives for the overuse of costly technology, and allows for uncontrolled legal action. While there are many causes of the cost spiral, solutions have been far and few between leading to the increasing need for managed care to cherry pick cases, limit access to expensive services and keep pressure on providers through lower than adequate reimbursement rates.

As seniors age, many of them, or their families acting on their behalf, find that managed care can mean less care. They can be denied admission to a nursing home, or have their admission curtailed with a discharge notice well earlier than might have been with a fee for service plan. As we have all learned, your doctor had better be in network or the insurance may not cover the costs. It is the goal of managed care to keep costs down in order to keep profits up. Often families are advised to dis-enroll from a Medicare managed care plan in order to better cover their needs and services. What will happen when/if there is no fee for service to return back to?

With regards to long term care and the implementation of managed care for these dependent people, residents are admitted to a long term care Facility for both skilled and custodial care. While both are critical to quality of life and quality of care, most managed care plans currently do not pay for custodial care. They seek to provide the lowest cost service, not the one that is best for the resident or their family.  Of specific concern in New York are 2 key points: who will set the rates that managed care will pay a nursing home and will they be required to contract with all willing nursing homes.

Since 1983, New York State has promulgated rates for all nursing homes based on their costs. Each home receives it own unique rates based on its own direct, indirect, non-comparable and capital costs. While this system has atrophied over past 30 years, it was individualized and created a level playing field across all homes. With the adoption of managed care, who will set the rates for these homes? Since the incentives for managed care are rooted in fiscal controls and savings, it is not a stretch to believe that the cheaper providers will be the preferred providers – a dive to the bottom..

What will require managed care plans to pay a reasonable rate? Will plans be able to pick and choose which homes it will contract with, based solely on price? If the managed care plan does not contract with the local nursing home, the Family may have to choose a nursing facility not in their Community. The managed care plan may not approve nursing home placement, choosing instead to have the client stay at home either cared for by family members or by a few hours of home care. This places a huge burden on family caregivers 24 hours a day, seven days a week and/or forces the patient to left alone for many hours of a day.

In conclusion, the future of quality long term care services in New York State is at best, in question, and, at worst, under siege. After adjusting to 5 years of Medicaid cuts, will managed care be the final straw that breaks the proverbial camel’s back? Without rules to set a level playing field, managed care may undermine the very fabric of our public safety care systems for the most vulnerable of our State if not handled carefully. Access and quality need to be protected as we move into this brave, and cheaper, new world.

Robert Heppenheimer has been active in Skilled Nursing Facilities for his entire healthcare career and has been an advocate for change in this industry. From 1990 – 2005, Mr. Heppenheimer was Administrator of Record in several facilities on Long Island including; Sunrise Manor Center for Nursing & Rehabilitation, John J. Foley Skilled Nursing Facility, Bellhaven Nursing Center, and Grace Plaza Nursing Center. He has been Executive Director for several facilities since 1999 and took a lead position in New York State appointed Receiverships for Bethany Gardens (Rome, N.Y.) and Affinity Skilled Living & Rehabilitation Center (Oakdale, N.Y).  During his tenure he has been responsible for developing proactive programs in the facilities to improve the quality of life and the level of care and compassion provided by facilities.

In 1999 he first became an owner of a skilled nursing facility and has been active in developing these facilities to meet the needs of the “Next Generation”. In March 2006, he became Owner/Operator of Hilaire Farm Nursing Home a 76 bed home in Huntington, New York. In February, 2008 Bob became the Owner/Operator of Nesconset Center for Nursing & Rehabilitation in Smithtown, New York and has brought his innovated philosophy and technology to this Facility as well.

Mr. Heppenheimer has served as President of Intercounty Health Facilities Association, a 55 member Nursing Home trade association on Long Island as well as on the Board of NYSHFA for many years. He currently serves on the Legislative Committee for NYSHFA. He has lectured around the State on Culture Change and other nursing home related topics. He currently serves as Chairman of the Board for a charitable organization for stroke prevention and awareness (Hope for Stroke) and was a founding member of another stroke awareness charity, Judy’s Run.

13. June 2012 by David Weiss
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