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Medicaid LTC funding shortfall projected at $6.3 Billion in 2011

December 15, 2011
by Kevin Kolus
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The shortfall in Medicaid funding for long-term care will reach $6.3 billion during 2011, according to projections released Thursday by the American Health Care Association (AHCA).

Additional analysis in the report, authored by consultant firm Eljay, LLC, on behalf of AHCA, shows the projected national average shortfall equates to a $19.55 per patient per day loss—up from the $16.54 loss in 2009.

“For the average 100-bed nursing facility where approximately 63 percent of residents rely on Medicaid, this shortfall translates into an additional cost of $1,230 per day more than is reimbursed by Medicaid to care for those residents,” according to AHCA.

The projected shortfall—based on data from 37 states for 2009, or 83 percent of the Medicaid patient days nationwide—represents a new high for Medicaid, according to the report. In contrast, the percentage of allowable costs covered by Medicaid is at the lowest point since 2003. State budget deficits coupled with the expiration of federal stimulus funds as of July 1, 2011, were primary contributors to the shortfall.

“States continue to budget for, and to redirect more long-term care funding to noninstitutional services, including new programs and delivery systems that will further promote state rebalancing efforts,” the report read. “This heightened competition among long-term care programs for limited state resources, combined with sagging state economies, has slowed the rate of growth in Medicaid rate increases.

“At least 60 percent of states have either reduced rates or provided no rate increases for FY 2012.”

The report also noted that Medicare cross-subsidization of Medicaid will no longer allow facilities to have break-even margins once scheduled Medicare reductions go into effect in 2012.

“The combined shortfall of both Medicare and Medicaid is projected to exceed $2 billion, marking an end to the current reliance on Medicare cross-subsidization of Medicaid shortfalls and the beginning of greater uncertainty,” the report read.

No determination of the Medicaid shortfall could be made for 2010, since 2010 cost reports were unavailable in all but a few states, according to Eljay. The 2011 Medicaid shortfall is a projection based upon trending of the most recently available cost reports to 2011 and comparing these trended costs to current rates.

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