Medicaid Funding Model Unsustainable

The following commentary is by Jim Holway, Board President of Living Well Group. It appeared as an Op Ed in several Vermont publications during the week of 9.27.21. Jim currently serves on several non-profit boards: Board President of Community of Vermont Elders, Vermont Kin as Parents and serving as the long term & residential care executive committee member at large for Vermont Healthcare Emergency Preparedness Coalition.

Even before COVID hit, the entire medical community faced a funding and workforce crisis. The pandemic exacerbated the shortage of people willing to risk their lives to care for others and highlighted the need for increased funding, especially for residential care homes like those run by the Living Well Group.

Last spring, Living Well Group was praised by the state legislature for their work in keeping their residents COVID free. This was accomplished using relief funds to expand sick pay to anyone exposed to the virus, providing hazard pay and other unbudgeted measures that worked to protect the vulnerable elders who call our residential communities home. Now, however, the Delta variant has raised its lethal head despite 100% of our staff and residents being vaccinated. One unvaccinated visitor to one Living Well facility in August resulted in two thirds of the residents, and several staff, being infected with COVID – sadly resulting in one death. Could this have been prevented and if so, how?

The reality on the ground is that the pandemic continues-in fact, the positivity rate has necessitated a return to the most strict and expensive health and safety protocols implemented at the beginning of the pandemic. Staffing challenges in this sector are as difficult as many others. Many long-term care programs are spending tens of thousands on marketing and sign-on bonuses. This situation is not sustainable long term for a non-profit organization such as the Living Well Group. The cost will be that non-profit affordable housing options offered by long term care and residential care facilities will likely be gutted and future options severely limited. Safety protocols and proper intake procedures are expensive. Keeping staffed and safe means regardless of fiscal resources, facilities must incur greater expenses.

Pandemic relief funding, so essential to our early success in protecting our community, has often been substantially reduced, or denied as of December 31, 2020, as if the crisis magically ended in 2020. Apparently, only organizations which were unsuccessful at curbing infections and balancing their budget are eligible for the extended funding which is so necessary for continuing to protect our residents and staff. Last month, our 2021 ACCD Economic Recovery Bridge Grant funding request was denied within two hours of our submission. The rejection response explicitly stated that, due to our initial success in mitigating infections and our relatively healthy appearing financial situation, we are not eligible for continued funding. But part of that positive financial position came with the permanent loss of long-term care beds in Vermont.

In the spring of 2021 the Living Well Group, where over half of our 100 beds were filled with Medicaid recipients, found ourselves at a safety-related crossroads: cut corners on maintenance, safety, professional expertise or close a 12-bed facility and use the proceeds from selling the property to support the remaining 78 beds that currently cost more than Medicaid will compensate. This is not only a medical crisis, but also an affordable housing crisis. If the shortfall in Medicaid funding for residential care is not addressed, and soon, it is only a matter of time before the next “For Sale” sign appears at another small facility anywhere in Vermont.

Closing facilities not only “kicks the can down the road,” but it also worsens an already-existing shortage of residential care beds for people who can’t afford the extraordinarily high cost of for-profit care – often $10,000 or more per month per bed. These are people who rely on the support of the Medicaid system for their very lives. This crisis begs the question: how does Vermont feel about keeping our elders safe from COVID, in the care of properly trained professionals, and in properly maintained facilities, all when success is rewarded with “You didn’t fail enough last tax cycle”?

The Medicaid reimbursement formula is flawed. Residential care homes, such as those run by the Living Well Group, receive a significantly lower rate of Medicaid reimbursement than their peers who are classified as nursing homes, even when a comparable level of care is provided in the residential setting. This flawed formula affects not only residential care homes, but also organizations which provide home health care. This is not a new issue, but one that preceded COVID. The reality of the increased cost of care under COVID measures has heightened the need for a fix to the funding formula.

There is a two-fold solution to this dilemma. Increase COVID relief funding across the board to all elder care facilities, while at the same time fixing the long-term endemic financial crisis that inadequate Medicaid funding presents. A person who needs expanded care should have the option to stay in the home of their choice, whether their own or a group residential facility, even when the cost of their care spirals up as they age. Fully funding Medicaid for residential and home-based care will keep our frailest elders protected and give them dignity as they age in place. We urge the legislature to address these funding crises before they culminate in a corresponding housing crisis for lower income elders who need expanded care.

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