Cash-strapped nursing homes fear federal Medicaid cuts

Federal data cited by the Missouri Health Care Association show 92,767 Missourians used nursing homes last year. (Garrett Bergquist/KRCG 13)

Ask Ben Scheulen about proposed changes to Medicaid, and he paints a grim picture.

As CEO of JMS Senior Living, Scheulen manages eight skilled nursing facilities throughout the state. He said about two-thirds of the 400 people living in his nursing homes use Medicaid in addition to other programs such as Medicare. Reimbursements from Medicaid cover the bulk of his costs. Scheulen said state cuts announced at the end of June already have him considering laying off workers.

"With the federal funding (cuts), we wouldn't survive," he said.

President Donald Trump's budget includes a proposal to change how Medicaid dollars are distributed to the states. States could ask to receive the money in a block grant or receive a cap for each person who uses the program. The White House estimates this would save $610 billion over 10 years. The president's budget prioritizes reducing the national debt, which Federal Reserve data show stood at $19.8 trillion through the first quarter of 2017, more than double what it was 10 years ago. Further changes to Medicaid are on the table through GOP efforts to replace the Affordable Care Act. The Senate's version of the bill would reduce the provider tax from 6 percent to 5 percent and change how costs are calculated relative to the Consumer Price Index.

Nikki Strong, executive vice-president of the Missouri Health Care Association, said the block-grant proposal would immediately cut Medicaid reimbursement rates by 20 percent. In addition, the provider tax reduction would further cut daily reimbursements by about $12 per patient. Strong said nursing homes already operate at a loss. In Missouri, she said nursing homes spend a daily average of $17 more per patient than the reimbursement they receive.

"We're providing this care to individuals for significantly less than what we're being paid for the cost to care for them," she said. "It's unsustainable."

Federal data cited by the Missouri Health Care Association show 92,767 Missourians used nursing homes last year. About 60,000, or 65 percent, use Medicaid.

Scheulen said his company and other nursing care providers already are reeling from state cuts that went into effect at the end of June. Starting August 1, Scheulen said Medicaid revenues will drop by 3.5 percent. For his company, this translates to a 24 percent drop in net income for the year. He said this means no pay raises and no renovations at his buildings, which are more than 30 years old.

"I can't add enough residents to offset the Medicaid cut that we're going to receive next year," he said.

When those state cuts are combined with changes to Medicaid under the Senate healthcare bill, Scheulen said this would reduce the daily reimbursement his facilities receive for each person from $154 to less than $110. He said he doesn't think any long-term care company would be able to stay in business. This would leave people who use those facilities with nowhere to go. Scheulen said independent- and assisted-living facilities are no cheaper and hospital stays are far more expensive.

"These are hardworking, middle-class individuals who exhausted their earnings over their life on their healthcare and now are relying on the government to pick up for them for a system that they paid for," he said.

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