DHFS letter: Deal may be near on nursing home payment reform

[April 05, 2022]  By PETER HANCOCK
Capitol News Illinois
[e-mail]

SPRINGFIELD – Officials at the Department of Healthcare and Family Services believe they made “significant progress” last week toward reaching agreement on a plan to overhaul the way nursing homes are reimbursed through the state’s Medicaid program, according to a letter obtained by Capitol News Illinois.

It’s something Gov. JB Pritzker’s administration has been working on for two years to ease the severe staffing shortages that exist in many of the state’s long-term care facilities. An estimated 45,000 Illinois Medicaid recipients live in about 700 nursing homes throughout the state.

In his budget proposal in February, Pritzker proposed a $500 million plan to increase reimbursement rates for facilities that raise their staffing levels up to certain targets. Some of the money would also be used to fund pay raises for certified nursing assistants as they gain more experience in their jobs.

The money for that would come from a bed tax the state levies on nursing homes, which would draw down additional federal reimbursements.
 

That plan had strong support from the senior advocacy group AARP Illinois and some segments of the nursing home industry. But it has faced resistance from the state’s largest nursing home industry lobby group, the Health Care Council of Illinois.

But HFS officials believe the logjam may have been broken earlier this week.

On Tuesday, March 29, HFS officials met with HCCI board members and finally hammered out what may be an agreement. In a letter sent via email two days later to HCCI leaders, HFS Director Theresa Eagleson summarized the proposed agreement.

According to that letter, a copy of which was obtained by Capitol News Illinois, HCCI agreed to a tax that would be set by the department and incentive payments based on nursing home staffing hours.

Theresa Eagleson, director of the Illinois Department of Healthcare and Family Services, speaks at an event in Springfield last year. (Capitol News Illinois photo by Jerry Nowicki)

But the letter indicates that HCCI is seeking additional provisions costing about $200 million that HFS has apparently decided to leave up to the regular state budgeting process.

Those include transitioning to the new formula over an 18-month period, a “transitional pre-payment” for new hiring for six months and an add-on payment for nursing homes above the Medicaid average that would not be linked to improving quality of care.

The letter said the agency “cannot speak to the availability of funds” beyond the $500 million included in Pritzker’s budget proposal, which would “cover the cost of substantive changes and will drive long-overdue quality improvements” at nursing homes.

“We view this total package, with or without the additional funding to the base rate, as a significant and intensely needed step in improving care for Illinois’ nursing home residents,” Eagleson said in the letter. “We are delighted by the progress made this week toward reaching agreement on these critically-needed reforms, and we look forward to working with you and other industry groups to codify these substantive changes.”

The letter also indicated HCCI is seeking an additional $25 million for an increase in the base reimbursement rate, not tied to quality improvements.

A spokesperson for HCCI would not confirm that those agreements had been reached or provide any other details, and lawmakers involved in health care budget negotiations did not respond to requests for comment.

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government and distributed to more than 400 newspapers statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.