Michael S. Pochowski headshot
Michael S. Pochowski

Earlier this month, The Washington Post published an article under the headline “Assisted-living homes are rejecting Medicaid and evicting seniors.” Unfortunately, the article provided an incomplete view of the reality facing assisted living providers.

As the article points out, 4.4 million Americans have some form of long-term care paid for by Medicaid, the state and federal program that pays for health care and long-term care services to eligible low-income individuals. Reimbursement to providers (including skilled nursing facilities and residential settings such as assisted living), however, has been a chronic problem, leading to fewer and fewer providers accepting Medicaid residents.

A 2021 Genworth Cost of Care survey calculated monthly costs for long-term care at an assisted living community at $4,500 (though costs will vary due to local market rates) $9,034 in a nursing home and $19,656 for around-the-clock care in a home health setting. Costs have only increased since then, due to workforce shortages driving up labor costs, general price inflation and inflation for healthcare services and supplies. Provider reimbursement has not kept pace, and although state reimbursement levels will vary, the national average is roughly $3,000, well below the cost of care.

It’s important to note that assisted living actually preserves Medicaid dollars. Medicaid is the nation’s largest payer of long-term care services, and according to estimates, if assisted living were not an option, as many as 61% of senior residents may be forced into far-costlier skilled nursing facilities, at a cost of $43.4 billion. This additional cost would cripple state and federal Medicaid budgets. If state policymakers were serious about making assisted living services available to their older residents, they would increase reimbursement to adequately compensate providers for the true cost of care.

Legislators in New Jersey are considering a bill that would boost daily Medicaid rates for assisted living housing and programs, a move meant to help low- and middle-income seniors live independently longer and provide better pay for their caregivers. The bipartisan bill would increase reimbursement for assisted living communities and programs, as New Jersey’s rates have long lagged behind other states and haven’t increased for 10 years.

One of the bill proponents said: “There is a reason there are so few communities in New Jersey dedicated to low-income, frail residents. The Medicaid reimbursement rate is chief among those reasons. As a state seeking continued transition from institutional settings to home- and community-based settings, without meaningful Medicaid rate increases, the housing problem will only get worse as the state continues to age.”

With an aging population and the future demand for long-term care and assisted living services, states will have to follow suit.  We are hopeful other states, such as Wisconsin, consider similar efforts.

The Washington Post article suggests that resident “eviction” is an “increasingly common practice.” This is overstated and are worst-case scenarios brought on by a Medicaid system that does not adequately reimburse for the actual cost of care and services provided to individuals.

Here in Wisconsin, as in most states, the Medicaid long-term care program, Family Care, contracts out to managed care organizations (HMO-like entities) that negotiate with providers to provide the actual hands-on care to eligible elderly individuals and persons with disabilities. MCOs accept a capitation payment from the state to manage costs, utilization and quality.

Most providers will tell you that little to no negotiation occurs — they either accept the Medicaid rate offered by the MCO or the residents served will be moved elsewhere by the MCO. When a MCO and assisted living community are unable to agree on a reimbursement rate, the facility works with the state long-term care ombudsman, the state health department, the resident and the resident’s family to locate another suitable living arrangement for the resident. A resident is not “evicted” from an assisted living community, but rather, protections are in place to help facilitate the transfer process.

Far from being “the wild west” the article describes, the decision to exit an MCO contract and notifying residents is an orderly process. And let’s be clear — it’s the solution of last resort communities that have held off making the decision in the hope that policymakers would increase rates to reflect the cost of care and services they provide residents on a daily basis. It is not a knee-jerk decision and not the outcome that any assisted living community wants.

This is a complex subject that deserves comprehensive and balanced reporting. Singling out senior living communities misses the larger point that without more equitable reimbursement, more older adults will be denied access to assisted living.

Michael S. Pochowski, MPPA, is president and CEO of the Wisconsin Assisted Living Association, a state partner of Argentum.

The opinions expressed in each McKnight’s Senior Living guest column are those of the author and are not necessarily those of McKnight’s Senior Living.

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