ANNAPOLIS – Maryland’s health department plans to take back $20 million to $26 million in nursing home money as part of an emergency Medicaid budget reduction package due to take effect next month, officials said.
For the first time in at least five years, the Department of Health and Mental Hygiene will implement what it calls an “early recovery” procedure in an effort to combat its $33 million Medicaid nursing home deficit.
The money is from estimates of this year’s unspent funds earmarked for nursing services – nursing staff wages, benefits and other costs.
Each year, the department reviews records from the previous fiscal year to assess the difference between what it paid to nursing homes and what the homes really spent, health department Deputy Secretary Debbie Chang told the House Environmental Matters Subcommittee on Health Tuesday.
Nursing homes are allowed to keep a percentage of any unspent money as profit, Chang said. The department recovers the rest.
At the end of this fiscal year, Chang said, the amount the department will recover will be substantial – about $26 million, she estimates. The department’s proposal cuts that money now, at the beginning of the fiscal year, instead of in 2004, when the funds are scheduled to be recovered.
“We always recover the money,” Chang said. “It’s just when we recover it that’s the issue.”
Nursing home representatives, while sympathetic to the department’s budget problems, say they’re worried the proposal may go too far in cutting funds they say providers need to maintain adequate elder care.
That’s because other parts of the proposal would permanently reduce the percentage of unspent money nursing homes are allowed to keep. Representatives say this profit is often used to subsidize other projects like renovations and specialty care costs. They call the profit an incentive to not spend all allotted money.
“We’re willing to go ahead with the accelerated recovery, provided the department ceases going after the permanent reductions,” said Mark D. Woodard, representative for the for-profit nursing home coalition Health Facilities Association of Maryland.
The department isn’t sure whether permanent reductions are appropriate either, Chang said. Health department and nursing home representatives will meet through the next week to discuss their impact and brainstorm alternatives.
Meanwhile, the centerpiece of the nursing home budget reduction – the “early recovery” portion of the proposal – will move forward, Chang said.
There’s little quarrel with that, Woodard said, but he also doesn’t think the department will recover as much money as it’s expecting.
According to the health department, 42 percent of Maryland’s 250 nursing facilities spend their entire Medicaid nursing services budgets.
Those figures will change this fiscal year, Woodard says, because nursing homes plan to spend more to increase nursing staff numbers and wages.
The result, Woodard said, is “the department is going to find they’ll get a lot less money than they thought, because we’re spending the money.”