Medicaid Cuts Take Effect

For most people, Friday was just another day.

For nursing home administrator Tatiana Johnson, the day loomed much larger.

On July 1, state cuts to Medicaid reimbursement went into effect.

For facilities that cater to large Medicaid populations, those cuts mean less money feeding into already tight budgets. The Association of Healthcare Organizations reports that Medicaid nursing home reimbursements are already underfunded by $22 million.

“It weighs on me a lot,” Johnson said Friday.

While the initial proposal from Gov. Dennis Daugaard called for an across-the-board 10 percent cut to all Medicaid providers, legislators negotiated a 2 percent to 4 percent cut to nursing homes. Large healthcare systems face deeper 11 percent cuts.

At Golden LivingCenter – Meadowbrook, where Johnson is administrator, a 3 percent cut will mean $25,000 less annually. At the Kadoka Care Center, a 3 percent cut means $3.50 less per day for each of its 18 Medicaid residents. That adds up to about $23,000 annually.

The 11 percent cut to Regional Health adds up to $5.5 million per year. Another $1.5 million cut in state funding is also expected.

“Obviously it’s going to put pressure on us financially,” said Mark Thompson, Regional vice president of finance.

This year’s cuts come after a two-year period of Medicaid reimbursement freezes.

Medicaid, the health insurance program that serves low-income patients, seniors and people with disabilities, is funded by states with matching federal funds. Nursing homes and healthcare facilities rely heavily on Medicaid reimbursement. In South Dakota’s 109 nursing home facilities, 57 percent of the residents use Medicaid.

Hospitals face a similarly high Medicaid population. At Regional Health, 14 percent to 15 percent of patients use Medicaid.

Ruby Sanftner, administrator of the Kadoka Care Center, said the 3 percent cut was somewhat of a relief.

“It would be devastating if we had had to do the 10 percent cut,” she said. “I don’t know if the facility could have continued.”

But the 3 percent cut still hurts, she said.

“Our strategy is we have looked at doing a little bit of cutting in some of the supplies that we use,” she said. “It’s going be a real close year in terms of getting any new equipment.”

She expects to involve the community if such needs arise. “We do have a lot of community support, so I’m looking for more of that. I’m going to have to be out there pounding the streets,” she said.

As for staffing, she doesn’t expect to make any cuts. “We’re staffed really slim, anyway,” she said. She hopes to offer employees a 1 percent raise. “That’s all I can do, and that’s not much. All of their costs of living have gone up, too. … But that’s all we can do this year.”

Thompson said in order for Regional to manage the cuts, new projects will be reconsidered and job vacancies may be left open. “What we’re going to do, obviously, is take a very hard look at how we spend our money … especially in the first part of the year,” he said.

He doesn’t expect to cut employee salaries, a strategy Regional used in 2009 to manage budget woes. “We feel we’ve already asked a lot of employees,” he said.

Meadowbrook’s employees can also rest assured the cuts won’t lead to layoffs or pay cuts, Johnson said. Instead, the Meadowbrook facility plans to make small changes, such as going paperless when possible and being creative with programs. It is also considering offering more therapy services, which are profitable.

“We just learned to watch every penny. We’re not going to let resident care suffer,” Johnson said.

That’s a sentiment echoed by Thompson and Sanftner.

“We still will provide care for everybody who comes through the door,” Thompson said. “We are going to do everything we can” to ensure patients don’t even notice the cuts.

That vow could become tougher for hospitals and nursing homes if next year’s state budget doesn’t improve. “What we’re hearing … if we don’t see recovery in sales tax collections … we anticipate similar types of cuts next year,” Thompson said.

Sanftner hates to even think about that possibility. “That’s my only fear.”


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