The Montana Health Care Association and several assisted living communities and skilled nursing facilities that are members sued the state of Montana on Monday afternoon, alleging that the state violated the law when it cut Medicaid reimbursement rates for the providers.

Also named in the lawsuit are the Montana Department of Health and Human Services and its director, Sheila Hogan.



The plaintiffs in the lawsuit filed Monday against the state of Montana, the Montana Department of Health and Human Services and its director:

  • The Montana Health Care Association on behalf of all of its assisted living and nursing home members;

  • Caslen Living Centers Inc., operator of six assisted living facilities in the state;

  • The Pines of Polson, which operates two assisted living facilities in Polson, MT;

  • Valley View Home, a non-profit corporation that operates a skilled nursing facility in Glasgow, MT;

  • Wibaux County Nursing Home, a county-owned skilled nursing facility in Wibaux, MT;

  • Evergreen at Missoula, doing business as Missoula Health and Rehab, a skilled nursing facility in Missoula, MT; and

  • Empres at Shelby, doing business as Marias Care Center, a skilled nursing facility in Shelby, MT.

The complaint seeks an injunction prohibiting the state from continuing to apply the lower reimbursement rates, which the plaintiffs maintain were adopted improperly.  The lawsuit also asks a judge to order the state to take “any and all actions necessary to adjust payments” to properly reimburse the plaintiffs.

Health Department spokesman Jon Ebelt told the Associated Press that the department does not comment on ongoing litigation, but that officials will review the legal action and respond through the legal process.

The plainfitts, MHCA Executive Director Rose M. Hughes told McKnight’s Senior Living, believe the state only “paid lip service” to requirements in the Montana Administrative Procedures Act and, therefore, the rates should be invalidated.

“They gave notice. They held a hearing. People got to say that they didn’t like the cuts,” she said. But the Health Department did not demonstrate that the specific amounts cut from reimbursement rates were reasonably necessary, she said. Nor did the department give the plaintiffs and the public an opportunity to meaningfully participate in the rate-setting decisions, as required by law, the plaintiffs believe. They also contend that the reduced rates do not meet mandatory levels specified in the law.

Operators knew that rate cuts were coming, based on the passage of state S.B. 261 in 2017, Hughes said. But “the department had the ability to make some choices about how they did it and how they applied the cuts to the various providers and so forth,” she added.

Mistakes, according to plaintiffs

In the case of assisted living facilities, Hughes said, the plaintiffs believe that rate calculations led to a larger-than-necessary cut.

“They took the cut across even the part of the rate that was patient contribution, and they didn’t take into account the fact that patient contribution was likely to increase due to the Social Security increase,” she said.

The rate cut also was applied to the maximum reimbursement rate that an assisted living facility can receive instead of it being applied to the average rate, Hughes said. “The average rate is what they’re actually paying, so if they were going to apply a percentage across the board and treat all of the providers similarly, they should have taken it on the average rate.”

The plaintiffs also believe that the state is “doubling down on these cuts, and it’s across Medicaid providers,” she said.

When the cuts were implemented Jan. 1 — halfway through the fiscal year — state officials said the cuts needed to be at 2.99% in order to save the dollar amount they were tasked with saving by the legislature, she said. If the state had been given a whole fiscal year to realize the savings, the cut would have been 1.5%, officials said, according to Hughes.

The plaintiffs expected that cuts would drop to 1.5% this July 1, “because they were recovering the same amount of funds each fiscal year and they were doing it over a full-year period,” she said. “Well, they came out and said, ‘Oh, we decided to just leave the 2.99% [cut] in place.’ So in fact, they are now saving twice as much money as what they were supposed to save under S.B. 261, which they gave as the reason for the cuts to start with.”

‘A real access issue’

Montana has more than 200 assisted living communities, Hughes said. A 2016 study by the MHCA and the AARP Montana found that less than half of assisted living communities in the state accept Medicaid. “There is a real access issue here,” she said.

That same study found that many of the facilities that said they accepted Medicaid only accepted a few beneficiaries each, Hughes said.

“They … just didn’t really feel prepared to serve Medicaid clients on a first come, first served basis because of the very low rates,” she said. “So that problem has been in existence, and it’s just exacerbated when you then turn around and cut some more.”

The MHCA is the state partner of Argentum. It represents more than 100 for-profit and not-for-profit assisted living and skilled nursing facilities.