BATON ROUGE, La. — Louisiana’s payments to private nursing homes for taking care of Medicaid patients have risen substantially over the last decade, with the facilities pocketing ever-higher dollars from the state even as their occupancy rates stayed largely flat, according to an audit released Monday.
Legislative Auditor Daryl Purpera’s office said Louisiana uses payment structures locked into state law that are out of step with other states and that drive up costs on the nursing homes and long-term rehabilitation facilities.
The state Medicaid program spent $8.7 billion in federal and state dollars on nursing home care for people who are elderly or disabled from 2006 through 2016, as daily rates paid to about 260 nursing homes increased 54 percent from $112.34 to $172.82, according to the audit. In the last budget year that ended June 30, Medicaid payments to the facilities reached $1 billion.
Occupancy rates over the same period, however, “have generally remained the same,” growing by less than 1 percent, the review says.
The auditor’s office questioned what the state received from boosting the spending.
“Even with the increasing payments to nursing facilities, Louisiana continues to rank poorly in regards to quality of care,” auditors wrote.
The skyrocketing growth in Louisiana’s spending on nursing homes comes as the state has grappled with repeated financial gaps and as Republican lawmakers have targeted spending in the Medicaid program as a place for additional scrutiny. But payments to nursing homes have certain protections in the Louisiana Constitution that make them harder to cut, and the industry is a powerful one and hefty campaign contributor at the state capitol.
Some lawmakers have pushed for the state to hire private companies to manage payments and spending on such long-term care facilities, hopeful it could drive down costs, but the efforts so far have gone nowhere. Gov. John Bel Edwards has urged caution on the idea and suggested it needs more study to determine if such managed-care programs have cut costs in other states.
Purpera’s office identified adjustments to nursing home payments that could put Louisiana in line with other states and save millions of dollars a year, within the current structure of the program.
For example, auditors say if the state used a reimbursement method calculated only based on Medicaid patients — rather than also including private pay and Medicare-financed residents at the facilities — nearly $20 million could have been shaved off state spending in one year. Another technical adjustment to the reimbursement rate to make it mirror more closely what is done in other states, auditors wrote, could save an estimated $57 million per year.
Mark Berger, executive director of the Louisiana Nursing Home Association, resisted suggestions the state overpays for Medicaid patients in nursing homes. In a statement, Berger said Louisiana’s nursing homes receive the fourth-lowest payment rate in the nation.
“Louisiana’s comprehensive reimbursement formula encourages investment in direct patient care and staffing along with upgrades to nursing facilities, as technology and other health care innovations occur,” he said.
Auditors also said the Louisiana Department of Health needs to improve its oversight of payments to ensure they’re accurate. They said the agency should issue penalties for late cost reports from nursing homes and tougher sanctions for facilities that have repeat audit violations. Suggesting inadequate monitoring, the report says the department didn’t recoup $3.2 million in Medicaid payments for ineligible patients in 2014.
In a written response, Jeff Reynolds, the health department’s chief financial officer, agreed with most of the findings. He said the department will seek additional funding to expand its auditing of the facilities and already has adjusted its penalty policies in response to the audit.
Department Deputy Secretary Michelle Alletto said the agency doesn’t plan to ask lawmakers to change the nursing home rate payment structure in state law. She said in an interview Monday that the department is focused on working with the facilities to improve their quality of care and has started a pilot program with some nursing homes that have shown “very initial promising improvements.”
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