Budget imperative finally threatens nursing home bonus

It took a budget crisis, not any rational reassessment, to get Louisiana at least to consider getting on the right track in regards to long-term institutional health care. Regardless of the motive, the inefficient use of taxpayer dollars biased in favor of institutions finally looks like it is going to come under review, and actually be eliminated.

The looming 2010-11 fiscal year budget deficit, as part of the Commission on Streamlining Government exercise, much of which is being caused by the state’s largest expenditure of long-term care costs for the indigent and disabled, has prompted the state’s Department of Health and Hospitals to propose the single largest, by far, cut in spending with a $232 million reduction in reimbursements for hospitals and nursing homes in care – a position long advocated in this space. It would be an across-the-board rollback of rates to the 2006-07 levels, as Louisiana in ineligible to change eligibility standards due to its acceptance of federal money courtesy of the federal spending bill passed earlier this year.

Hospitals were nonplussed at their share of over $100 million to endure, and they may have a point. With Louisiana’s stubborn insistence on maintaining charity hospitals – whose days may be numbered if Washington Democrats succeed in cramming down an unwilling public’s throat any current budget-busting, quality-harming plans that will lead to nationalization of health care – many nongovernmental hospitals will be able to shunt Medicaid patients to these, so the state will not save much at all. This should be evaluated more closely by the Commission when it makes its recommendations by Dec. 15.


But the reduction in regards to nursing homes is very welcome, appropriate, and long overdue. For decades the industry has received special funding privileges, writing into law things such as a case-mix methodology that was costing the state five years ago almost $100 million needlessly according to the Legislative Auditor, and $20 million a year funding for empty beds. Therefore, its estimated $100 million cut merely eliminates this unfair advantage.

Louisiana Nursing Home Association executive director Joe Donchess threatens that such a move would decrease the quality of care. This is empty posturing to deflect attention from the real, and desirable, outcome. Federal and state regulations will not permit care to go below a certain level (and, according to the federal government, the majority of home already operate at a low level) or the facility loses its license. Instead, what will happen is a reversal of the wastefulness that has plagued Louisiana taxpayers for so long – the overcapacity of the industry finally will be wrung out of the system.

This is why it has gotten favorable treatment for so long, because industry executives believed they could keep building and the state always would cover the number of beds with patients. But a decade ago when the state (under legal duress) began shifting dollars to home- and community-based care, the industry got caught short yet successfully lobbied policymakers to continue to cushion it. So promising about this suggestion is the practical impact of a rate cut will be to force facilities to cut costs by closing space or even entire homes where the market unsubsidized by government can’t sustain the excess empty beds.

Farcically, Donchess suggested cuts instead should be made in the home- and community-care system – which already have faced cuts which are eliminating roughly 30 percent of service. This has been done according to a resource allocation model that tries to match actual need with resources provided – a model as of yet not applied to nursing homes where application of the model would probably lead to many residents (many willingly) exiting them in favor of home- or community-based care. This tactic probably would be better than just making the cuts across the board: apply the RAM to the nursing home population first, then base reimbursement reductions on who would remain. This more realistically would match actual need to resources.

There is no other reduction than this in all of state government that promises as large savings, perhaps a fifth of the entire deficit, and also would constitute as efficient a use of taxpayer dollars. Particularly encouraging is that DHH would not have suggested this unless the Gov. Bobby Jindal Administration seriously was considering pursuing this solution. Even if the Commission wimps out and does not recommend this, the groundwork is set for Jindal to propose this as part of next year’s budget. Now more than ever, common sense must prevail with adoption of this proposal into the budget.