Speaker 1: Hello, and welcome back to Honest Healthcare. This week we're picking back up on the topic of Medicare and Medicaid, this time with a focus on providers of skilled nursing care. Last week we explored some of the aspects of patient experience when receiving government health insurance for long-term care. If you missed that, be sure to go back and check it out for some background and helpful tips. One important fact to recall from last video is that Medicaid was intended as a safety net for the poorest of Americans. But in the half-century since it was created, the assistance program remains the only long-term option when it comes to government health insurance and has come to account for the vast majority of residents in skilled nursing facilities across Connecticut, 74.09% in 2019. This has a whole slew of unintended consequences for all parties, but one we'll be unpacking in this episode is that, to quote the American Healthcare Association, Medicaid has not covered the actual cost of care for decades. The reimbursement rate is the amount of money an insurance company or government pays healthcare providers per day for each resident enrolled in their insurance or assistance program. Medicare typically pays between $600 and $800 depending on the condition. This may sound like a lot, but when you factor in the cost of around-the-clock care by nurses, specialized therapy by physical, speech, and occupational therapists, food, social services, AIDS, medical supplies, and other operational costs, this is a pretty reasonable all-inclusive rate. Medicaid only pays $239 a day regardless of condition. It is the responsibility of clinical staff to treat all patients equally, including the provision of any therapy or medication a patient may need. This goes for any demographic distinction, including a person's insurance. And because the short-term Medicare coverage is all-inclusive, this can sometimes mean a big bill for those receiving private insurance. But for those receiving Medicaid, many of these services are simply not paid for. This means the costs are absorbed by the facility. Even though payroll for these highly-skilled workers and prescription medications are a major part of a facility's operational expenses. In the past, providers were sometimes able to make up the deficits incurred by Medicaid through a combination of private pay and Medicare, but the number of residents with private insurance is increasingly few, and as we mentioned in our previous video, Medicare only covers short-term stays. So even before the crisis brought on by COVID-19, many skilled nursing facilities were struggling to break even or operating at a loss. Historically, having a greater majority of patients covered by Medicaid has also correlated with lower staffing capacity, so it was a relief when in an effort to ensure care for those infected by COVID-19, lawmakers deemed the virus a qualifying condition for Medicare. But because many healthcare workers were understandably nervous about working during a pandemic, keeping facilities staffed still presented a major challenge. Providers ended up offering incentives, in some cases referred to as hazard pay, in order to ensure adequate staffing long before the government designated relief funds for essentially the same purpose. Now that facilities have worked to contain the virus and ensured that all residents and staff receive vaccinations, the financial cushion from the COVID patients receiving Medicare has evaporated, leaving facilities to cover the ongoing infection control expenses on top of standard operational costs, all while occupancy rates remain unsustainably low. For these reasons, flexible relief funds have been critical to the survival of many small and mid-sized nursing home companies. But with the skilled nursing industry left out of the most recent bill, a large swath of providers across the state expect to run out of funds by May or June of this year, which could mean a wave of closures, not unlike the 120 nursing homes we saw close in 2020 due to the financial strain of the pandemic. The facilities that do survive will likely only do so by making cuts elsewhere, but for those that don't, the elderly residents will be forced to relocate, which, as we've discussed in earlier videos, can lead to what's called transfer trauma, a phenomenon where the health of elderly residents rapidly declines following a sudden transfer. The current proposals for the skilled nursing industry include minimum staffing requirements and investigations into how relief funds were spent, along with an automatic cut to Medicare of 4% set to take effect in October unless lawmakers provide an exemption. As you may notice, none of these items include a means of offsetting the costs of a higher staffing requirement, or the looming exhaustion of relief funds, which is why representatives from the American Healthcare Association are advocating for a 15.6% increase in the Medicaid reimbursement rate so that facilities can afford to provide the mandated 4.1 hours of direct care per resident per day. These are just some of the challenges facing providers as they attempt to achieve stability while balancing on a system of government health insurance developed largely as an afterthought. If you want to read more about anything we discussed today, you can find our sources in the description below. 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