Nursing homes grapple with uncertainty over new MaineCare reimbursement rates

The state is planning to implement a new system for issuing MaineCare reimbursements to nursing homes on Jan. 1, but providers still don’t know what their rates will look like.
“Facilities do not even have an estimate of the new rates at this time,” said Michael Tyler, managing partner of Sandy River Company — a real estate firm that owns more than a dozen nursing home properties in the state.
“The concern is that Jan. 1, 2025, is 60 days away and the work necessary by both providers and [the state Department of Health and Human Services] to implement a new payment system is significant.”
DHHS has held a number of meetings this year and has solicited public comments about the updated methodology, which is intended to set more predictable rates, decrease the administrative burden and promote higher quality care.
On Oct. 23, DHHS unveiled its final proposal, laying out how it will calculate reimbursement for direct care and for routine and fixed costs. This does not give providers a full picture of what their reimbursement rates could look like, however, because rates vary by facility depending on the level of care residents need. Some asked for “shadow rates,” or projections, to help them plan.
“Providers are very anxious to know what their rates are. It’s hard to plan for the future and Jan. 1, 2025, is just around the corner,” Angela Cole Westhoff, president and CEO of the Maine Health Care Association, which represents nursing homes across the state, said during the meeting.
After the meeting, the association said it would work with DHHS to send out rate projections as soon as possible.
“At this point, however, we do not know when notices will be sent,” said Ben Hawkins, director of public affairs with MHCA.
Lindsay Hammes, spokesperson for DHHS, said the department is working to provide estimated rates this month.
“They will be estimates because the actual direct care rate will depend on the acuity of residents in each facility, and future fixed costs are unknown to the department,” she said.
MaineCare, the state’s Medicaid program, covers some of the cost of caring for nursing home residents who qualify medically and financially. Maine’s new system sets a base rate for all nursing homes at $232.01 per resident per day, based on an assumed 4.44 hours of direct care per resident per day, which is higher than current state and federal requirements.
The rate will be adjusted based on the level of care residents need: facilities that serve residents with higher than average needs will receive a higher rate and those that have below average patient needs will receive a lower rate, which Hammes said should encourage facilities to admit residents that need greater care.
In addition, nursing homes will also receive a rate of $137.20 per day for routine costs, such as laundry, food, administration and utilities.
The state will pay nursing homes both of these rates throughout the year, moving away from its previous practice of settling direct and routine costs at the end of the year. Fixed costs will still be settled at the end of the year.
Hammes said this means nursing homes “will know at the beginning of the year what their revenue will be for that year” and “will have greater flexibility in how they apply that revenue.”
Providers will receive additional funds if they demonstrate low rates of staff turnover, perform well on certain quality metrics and provide care for bariatric patients.
The rate reform update adds $49 million to base rates annually and includes a $72 million transition fund to implement the new system over three years.
“The new system focuses on increasing permanent staff levels, is forward-looking and gives [nursing facilities] greater predictability of revenue and flexibility in how to use the revenue,” Hammes said. “For the first time, Maine [nursing facilities] will have the opportunity to earn additional revenue by providing high quality care.”
Phil Cyr, president of Caribou Rehab and Nursing Center, has been involved in rate reform conversations throughout the year and was initially critical of the proposal when he spoke to The Maine Monitor this summer. But additional data released by DHHS on Oct. 30 put his mind at ease.
The report did not include specific rate estimates for facilities, but offered an overview of how much rates would be impacted. In the first year, five facilities will see a 0 to 5 percent increase; 14 will see a 5 to 10 percent increase; 45 will see a 10 to 20 percent increase; and 13 will see an increase of 20 percent or more.
In the first year, no nursing homes will see a decrease in rates. Over the three-year transition, only around 5 nursing homes, out of 77, will see a decrease in rates as all rates are brought either up or down toward the new base rate.
“It looks like the majority of facilities … are actually going to be receiving an increase as of Jan. 1, 2025. That’s good news,” Cyr said. “Initially, there were enough negatives to feel not good about it. But now that I’m seeing the information they put out yesterday, I’m feeling good about it. I think overall it’s going to be an improvement.”
Cyr said he is still concerned for facilities with high rates of contract staff. The new base rate assumes in the first year that 20 percent of hours are delivered by contract staff, which will then decrease to 10 percent in the second year and going forward.
“There are certain areas of Maine that just do not have adequate staffing to stay under 10 percent contract staff,” he said. “You’re doomed, eventually.”
Contract staff are expensive and intended as a stopgap during an emergency or staffing shortage, but some facilities have become increasingly reliant on them, which can impact quality of care. Hammes, with DHHS, said nearly half of Maine’s nursing homes currently meet the 20 percent contract staff hours metric.
“This approach gives the remaining [nursing homes] a year to reduce their contract staffing and move to more permanent staffing,” she said.
While developing the new system, the state studied the relationship between nursing home geography and operational costs to determine if rates should account for location.
The department found that rural nursing homes had higher costs than urban facilities, but super rural nursing homes had lower costs. Based on these findings, the department decided not to take location into account when determining reimbursements.
Hawkins, with the nursing home industry group, said the findings were surprising.
“Rural facilities often encounter higher operational costs related to staffing, transportation, and resource availability,” he said. “Beyond looking at select data, anyone who knows Maine understands that the economy varies considerably between Kittery and Fort Kent and everywhere in between.”
Tyler, who serves as board chair for MHCA, had a similar reaction, saying the data he provided DHHS showed a “significant difference in operating costs,” specifically salary and wages.
DHHS is also eliminating a specialty cost reimbursement for island and remote facilities because it found “no significant differences” between the state’s one island facility (Eastport Memorial Nursing Home) and the rest.
Hawkins said this will likely have negative consequences for the provider, but it’s difficult to know without seeing reimbursement rates.
“We have seen a record number of closures across Maine, but many of those are concentrated in rural, more remote areas — including islands. Now is not the time to remove priority funding for these at-risk regions,” he said.
At least 26 nursing homes in the state have closed in the last decade, and a recent report found that since 2010, nursing home closures in New England have outpaced the rest of the country and Maine had the highest rate.
Under the new system, nursing homes will be rewarded for performance on certain quality measures. To start, the state will look at nursing staff turnover, patient experience of care and use of antipsychotic medications. The state will also collect data on UTIs.
A portion of the MaineCare funds will be withheld until facilities meet certain thresholds on these measures. Those that meet the standards will get the full rate; those that don’t will have this portion withheld. Those funds will then go into a bonus pool to reward facilities that exceed the standards.
To ease provider concerns about transitioning to this new model, the state has allocated $8.1 million to supplement this bonus pool each year for the first three years.
The first year, those funds will be distributed to all nursing homes, regardless of how they perform on the quality measures, as long as they participate in specific steps to set up the new system. In the second year, nursing homes must meet minimum standards for two of three quality metrics to get the funds. And the third year, the funds will be distributed to those that exceed minimum standards.
“The quality measures and bonus pool is by far the least clear at this point,” Tyler said. “The key to high quality care is the ability for providers to maintain consistent staffing levels. The current employment situation in Maine makes this very difficult if not impossible to accomplish.”
The new system will also provide nursing homes with additional reimbursement if they provide bariatric care, or support for patients with obesity. Paul Saucier, director of the Office of Aging and Disability Services under DHHS, said the office would consider other specialty areas in the future, such as residents needing ventilator care.
Westhoff, the Maine Health Care Association president, said she was excited about the bariatric care add-on and asked about the possibility of a similar add-on for substance use disorder or patients with a history of homelessness.
Katie Fullam Harris, chief government affairs officer for MaineHealth, which operates two nursing homes, said there are ripple effects throughout the rest of the health care system when nursing homes are struggling. There are about 100 patients on any given day who are ready to be discharged from the hospital but have nowhere to go, she said.
“Having access to appropriate residential and lower levels of care is critical. Those lower levels of care facilities are clearly struggling to know how they can survive in the future without knowing what their rates will be,” she said.
This story was originally published by The Maine Monitor, a nonprofit and nonpartisan news organization. To get regular coverage from the Monitor, sign up for a free Monitor newsletter here.