Proposed changes in Medicaid rules will cause assisted-living facilities to go out of business and reduce services to elderly and disabled Arkansans at home, service providers say.
The changes, which would take effect next month, include a nearly 22 percent reduction in the rates paid to assisted-living facilities and set annual, per-person caps on the in-home help provided to participants in the ARChoices program.
The changes are part of the state's efforts to slow the growth of Medicaid spending by enough to save $835 million from the fiscal year that started July 1, 2017, through fiscal 2021.
Providers say the moves will result in more elderly and disabled residents ending up in nursing homes, where the cost of their care will be higher.
The Home Instead Senior Care franchise serving Washington, Benton, Carroll and Madison counties last month notified the 48 ARChoices participants it had been serving that it will stop participating in the program because of the changes. A manager said the changes will increase the firm's administrative costs.
The Oaks at Mena, an assisted-living facility, has already struggled with vacancies caused by a cap on the number of people in the state who can receive help from Medicaid to live in such places, administrator Lisa Master said.
The rate reduction "is going to just basically finish it off," she said.
State Rep. Dan Douglas, who attended a meeting of providers last month at the AARP offices in Little Rock, said he's heard more from Arkansans about the proposed changes than about any other issue since he was elected in 2012.
"People are concerned," the Bentonville Republican said at the meeting. "People are worried about their loved ones, and then are we just going to cram this down their throats and not take care of our most vulnerable citizens? That's bothersome."
The changes are expected to reduce spending on in-home services by $7.8 million and on assisted-living facilities by $4.6 million in their first full fiscal year, starting July 1, said Human Services Department spokesman Marci Manley.
That's about 4 percent of the total spending each year on the two programs combined, she said.
Gov. Asa Hutchinson in 2015 set the goal of slowing the growth of spending in the traditional Medicaid program by enough to reduce spending by about $167 million a year, or $835 million over five years, to help pay for the cost of Medicaid expansion.
The federal government pays about 70 percent of the cost of most services under the traditional program that serves poor people who are elderly or disabled people and children from low-income families. The state pays the rest.
The state's share for the expanded Medicaid program, which covers adults with incomes of up to 138 percent of the poverty level, is 6 percent this year and will rise to 7 percent next year and 10 percent for 2020 and beyond.
Mark White, deputy director of the state Department of Human Services' Aging, Adult and Behavioral Health Services Division, said the proposed rate for the assisted-living facilities was based on an actuarial study commissioned by the department.
In response to complaints from providers, the department has agreed to phase in the reduction so that it won't go fully into effect until 2019. It has also agreed to raise the cap on the number of Medicaid recipients who can receive the assistance during a year from 1,300 to 1,725.
The department will also consider any information supporting providers' argument that the proposed rate is too low, White said.
"We've told the providers we've talked to, 'Look, we're happy to revisit this in the first few months of next year,'" he said. "We'll do another survey. We'll take another look and see what it leads us to.
"We're willing to take a second look at it, and that's why we included that phase-in time period."
Assisted-living facilities and home-care agencies also complained that the department's proposed rates don't account for a minimum-wage increase passed by voters last month.
Under the approved initiative, the minimum wage will rise from $8.50 an hour to $9.25 an hour next month. It will then rise to $10 an hour in 2020 and $11 an hour in 2021.
In its written response to comments from providers and others, the Human Services Department said it plans to "take a systemwide approach to reviewing the increase and the need for any changes to address it."
Created in 2001, the assisted-living program serves up to 1,200 people with low incomes in 52 facilities around the state.
The state classifies the residents into four tiers, based on the severity of their needs, and pays the facilities corresponding rates, ranging from $70.89 to $85.35 per resident per day.
Under the department's proposal, the state would pay the same rate regardless of the resident's condition. It would start at $80.33 per resident, per day next month, then drop to $71.61 in July and $62.89 in 2020.
White said the change to a single rate would simplify billing for the facilities.
According to information distributed by the department, the current rate was the result of negotiations between the department and providers in 2002 and automatically increased each year.
When federal officials renewed the waiver authorizing the program in 2016, it was on the condition that the department "implement a rate that was based on evidence and actuarial soundness," the department said in its written response to public comments on the proposed rate cut.
Providers have complained that the actuarial firm, Seattle-based Milliman, surveyed only three facilities as part of its study and used cost estimates different from what many facilities pay.
For instance, Ed Holman, who owns a facility in Fairfield Bay and is chairman of the Arkansas Residential Assisted Living Association, said he pays nurses $22 an hour.
The rate study, using information from the provider survey, information from the U.S. Bureau of Labor Statistics and other sources, used an average annual salary of $34,860, or about $16.76 an hour.
"If I said $16 an hour [to nurses], they would just laugh at me and tell me where to send their last check," he said.
Providers say the cut will hit especially hard facilities such as The Oaks at Mena that were built with public financing and are required to reserve some or all of their units for low-income residents.
Master said her facility's 30 units are restricted to individuals with incomes of up to $24,540 a year or two people with a combined income of $28,020.
With that income, few people can afford to pay the facility's private pay rate of $2,500 a month for an individual or $3,750 for a couple, she said.
The cap on the number of people who can receive help from Medicaid for assisted living has already been a challenge, she said.
Once the cap is reached, the state won't allow new people onto the program until the start of the next program year, in February.
Last year, the cap of 1,300 residents served during a year was reached Dec. 18. This year, it was Sept. 5.
That restriction is in addition to a cap of 1,200 residents who can be on the program at any point in time.
"We have lost eight Medicaid residents so far this year and have only had one approved, and that was early in the year," she said.
Based on another study by Milliman, the rate in home care provided under the ARChoices program will increase by 12 cents an hour from the current rate of $18 an hour.
Carey Lingenfelter, general manager of the Home Instead Senior Care franchise in Northwest Arkansas, said that's not enough to make up for the minimum-wage increase and administrative costs he expects to come with the changes to the ARChoices program.
The changes will cap the cost of the services for beneficiaries with the most extensive needs, based on an assessment by a private contractor, at $30,000 a year. Those whose costs exceeded that amount this year will have their costs capped at this year's amount. The cap for those recipients will then drop by 5 percent in 2020.
Other beneficiaries will have a service cap of $20,000 or $5,000, depending on the classification of their needs under the assessment.
Lingenfelter said the rules will also require additional documentation by home-care aides, something White disputed.
"We want to provide this service to them," Lingenfelter said. "Unfortunately we just can't do that if it's going to cost us to do it. We won't be able to keep the doors open."
SundayMonday on 12/09/2018
CORRECTION: Carey Lingenfelter is general manager of the Home Instead Senior Care franchise serving Washington, Benton, Carroll and Madison counties. An earlier version of this article gave an incorrect first name for Lingenfelter.