There has been a lot of news lately about the cuts to the Medi-Cal rates and how the State is going to handle them. While the State's budget is not yet "final", it is critical to understand how the budget language will affect you. The California Association of Health Facilities (CAHF) has been and will continue to work very hard to get providers the best possible outcome in an extremely challenging time. Based on the CAHF conference call and our own interpretation we have developed a description of what the budget language will do.
THE MATHEMATICAL FACTS AS WE UNDERSTAND THEM:
- First, SNF providers get a 10% cut in payments June 1st2011.
- In other words, whatever daily rate you are getting right now, on June 1st that amount goes down by 10% for June & July of 2011.
- For example, if you are currently getting $200 PPD, on June 1st your payment would drop to $180 PPD.
PLEASE NOTE - Under the budget language, there will NOT be any AB-1629 recalculations completed for the 2011-2012 rate year. In other words, all calculations for 2011-2012 will start with the rate you currently have (minus) 10%. This is why we say the Payments, not the "rate", will be reduced.
- Next, starting August 1, 2011 we may get, but are not guaranteed, a rate increase.
- The MAXIMUM possible increase is 2.4%, which would be a net (decrease) of (7.6%) from the 2010-2011 rates. BUT...
- The 2.4% is NOT guaranteed.
The amount SNF providers will actually get is dependent on the amount of additional revenue the State believes they will generate. This additional revenue is additional Quality Assurance Fee revenue from increased QA Fees.
Please Note - Your QA Fees will go up.
2011-2012 PAYMENT EXAMPLE (JUNE 1st 2011 THROUGH JULY 31st 2012)
Let's assume the state does their calculations and gives us 2% of the possible 2.4%. The rates would then be as follows:
- Payment you were getting prior to June 1 (the 10-11 Rate):
- 10% <REDUCED> Payment you will receive after 6/1/2011:
- New Payment after 8/1/2011 with 2% increase (still 8% lower than 10-11 levels):
CASH FLOW - While we await CMS approval, the take-back will be delayed (but not eliminated):
- The difference between your current rate and the reduced payments will not be taken away until CMS approves the State Plan Amendment (SPA)
- However, the money will be taken retroactive back to 6-1-2011 once CMS approval is obtained
- Be prepared to pay the State the difference between your current rate and the reduced payments once CMS approves the SPA
POSSIBLE RECOVERY OF REDUCED PAYMENTS:
Currently the language indicates that the reduced rates, the amounts that will be taken away from you, will be repaid by the end of 2012 (see actual language after the link below). Although this language is positive, we caution you to plan for the possibility that the State will not be able to accomplish this payback. We are going through an extremely challenging economic time and there is no guarantee that an economic recovery will occur in time to enable the State to pay this money back. In addition, the State has a history of situations where planned paybacks or funding for programs did not happen.
Nursing Facilities should not budget their expenditures based on promises or funding sources that may not materialize. Our advice to nursing facilities is to be very cautious and take a conservative approach to spending in these uncertain times.
Please go to the following link to get a fully copy of the budget language:
Extension of AB 1629 QAF Table 5-20-11
Feel free to contact us at any time with questions or concerns about this issue.