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State, nursing homes face off over Medicaid funds

Providers cite $350m shortfall

Mary McHale (left) was helped through therapy by certified nurse assistant Yva Cadet at Marian Manor, South Boston.Suzanne Kreiter/Globe Staff/Globe staff

First, it was Kindred Nursing and Rehabilitation-Goddard in Stoughton. Then Glenwood Center in Lowell, Holyoke Geriatric and Convalescent Center, and Falmouth Center on Cape Cod.

In the last five months, each of these four nursing homes has gone out of business, unable to make ends meet with the money they get from Medicaid because reimbursement rates have not increased in nearly a decade, according to the Massachusetts Senior Care Association, the industry trade group. Scores more are on the edge of shutting down.

The recent closures, which required hundreds of elderly residents to be relocated, are the latest wave in a decades-long squeeze that has closed more than 50 nursing homes in Massachusetts in the past 10 years.


Nursing home operators say that reimbursements from Medicaid, on which many of their residents depend, are not keeping up with rising costs. But their calls for an increase are countered by some state officials who say there is no need to boost the payments — because fewer people are using nursing homes these days. Instead, the elderly are turning to other caregiving arrangements.

The standoff has become, in part, a battle of numbers.

Nationally, the cost of care exceeded Medicaid reimbursements by nearly $8 billion, according to a recent study by the American Health Care Association, a Washington nonprofit that represents nursing homes and other providers. In Massachusetts, that translates to a funding shortfall of roughly $350 million, or about $37 per patient per day.

"How can providers keep their doors open?" said Richard C. Bane, president of BaneCare, which manages five nursing homes in Greater Boston.

Holyoke Geriatric in Holyoke could not. Its 115-person staff said goodbye to the last of its 62 residents on April 24, after racking up millions of dollars in debt. All but two of the residents relied on Medicaid.


Patricia Psholka of Chicopee remembered the phone call from Holyoke Geriatric telling her she would have to find a new facility for her 94-year-old mother within three weeks.

"That itself is a kick in the gut," she said.

Psholka's mother, Annette Warner, is now in a Chicopee nursing home. But she asks when she can return to Holyoke Geriatric, which she called home for eight years.

"[The move] was disturbing to me but devastating to her," Psholka said. "She knew all of the people there, they knew her."

Medicaid, the health insurance program for the poor, is jointly funded by state and federal governments and is the nation's largest payer of nursing home bills. The benefits become available to many elderly after they exhaust their own assets, often by paying for nursing care, which can cost tens of thousands of dollars a year.

Nursing homes in Massachusetts are lobbying the Legislature to increase the $1.7 billion in Medicaid they receive from the state. The House included an additional $27 million in payments for nursing homes in its budget proposal for the fiscal year that begins July 1, but the Senate plan calls for no increase.

Governor Deval Patrick proposed a nearly $21 million cut in Medicaid spending for nursing homes.

Administration officials say the cut is warranted because people who may have once used nursing homes are turning to alternatives such as assisted living facilities, home care, and community programs. Madeleine Biondolillo, associate commissioner at the state Department of Public Health,said the state has roughly 5,000 empty nursing home beds, and the industry must shrink.


Marc Bard, president of health care consulting firm mB2 Consulting in Newton, said nursing homes are facing the same consolidation experienced by hospitals as more people used outpatient services and fewer stayed in hospitals.

"Consolidation is ubiquitous across the industry and nursing homes are no different," Bard said. "As cost has become an in-everybody's-face issue, obviously they are not immune."

Nationally, the number of nursing homes has declined by about 7 percent, to about 15,700, since 2000. In Massachusetts, the decline has been steeper, falling 20 percent to about 420 nursing homes from more than 500 in 2000.

Of the remaining nursing homes, about half of those are "operating in the red," according to the Massachusetts Senior Care Association.

In South Boston, at Marian Manor, the state's largest nursing home, assistant administrator Novyl Igo said the facility struggles daily to find ways to reduce expenses to cover the gap between the cost of care and Medicaid reimbursement.

"We would like our facility to be stronger and not have to cut any areas," she said, but the possibility of closure lurks. "We have to think that could be a reality."

State Representative Thomas A. Golden Jr., a Lowell Democrat whose district has at least a dozen nursing homes, said the demand for nursing beds remains strong in his area, as well as others, and the state should provide sufficient funding to keep facilities viable.


"When people go into a nursing home," he said, "they want to be close to the community that they lived in, worked in, know people in."

State Senator Harriette L. Chandler, a Worcester Democrat, agreed that more Medicaid money is needed.

"It's very hard to live on 2005 rates in 2014," Chandler said.

Chandler has proposed legislation that, in addition to increasing funding, would create training and career programs for nursing home employees. Industry officials say wages account for a large portion of nursing home costs, but even so they do not adequately compensate employees.

Yva Cadet, a certified nurse assistant, makes about $13 an hour. She works a shift at Marian Manor, caring for residents like 83-year-old Mary McHale, then goes to a second job at another nursing home.

McHale, who has lived at Marian Manor for 16 months, said she has come to rely on nurses like Cadet, who recently wheeled her to physical therapy to work on leg stretches. Without Medicaid, McHale said, she would not be able to afford such care.

"We're dependent on the people taking care of us [and] I thank the Lord for the people who do it for us."

Erin Ailworth can be reached at Follow her on Twitter @ailworth.