A group of Montana nursing homes and assisted-living facilities sued the state on Monday to halt cuts to their reimbursements for providing care to Medicaid patients, cuts that have caused other Medicaid providers to curtail services or close altogether.
The state Department of Public Health and Human Services cut the Medicaid provider reimbursement rates in January as part of spending reductions across state government aimed at closing a budget shortfall. Health department director Sheila Hogan previously said the cuts were needed because the Republicans in control of the state Legislature opposed increasing taxes.
The Montana Health Care Association and the six companies that are suing the health department say the department violated state law because officials did not show the need for the cuts or explain how they were formulated. Their lawsuit also claims the cuts should be invalidated because they conflict with a state law and because they were made without the required public participation.
The health department doesn’t comment on ongoing litigation, spokesman Jon Ebelt said. Officials will review the lawsuit and respond through the legal process, he added.
The department last year initially proposed a 3.47 percent reduction in the overall amount Medicaid providers are reimbursed, and it adopted a final cut of 2.99 percent after outcry by providers and the legislative committee that oversees the department. The health department plans to extend that 2.99 percent cut through the next financial year that begins July 1.
The association and the nursing homes are asking a judge to block the cut, reinstate the 2017 rate and to reimburse them for the approximately $3 million that they have lost since January because of the reduction.
The rate cut means a nursing home that should be reimbursed $187.17 per day, per patient this year is only receiving $181.01, according to the nursing facilities.
For larger nursing homes caring for dozens of Medicaid patients, the difference can amount to more than $100,000 a year. Besides nursing homes, the rate reduction also has forced closures and cutbacks for providers who help the disabled and people with developmental disabilities, and caused layoffs in hospitals in Kalispell and Missoula.
Some facilities aren’t accepting new Medicaid patients, or are cutting staff hours, wages, programs and equipment.
“It goes all the way down to whether grandma’s call light gets acted on quickly,” said Rose Hughes, executive director of the Montana Health Care Association.
The nursing homes suing the state say the health department did not explain how it came up with its rate. The department also doesn’t explain why it plans to extend the rate cut over the next year, the lawsuit said.
The lawsuit also says that the rule that set the cut conflicts with a law passed by the state Legislature in 2017 that raised the bed fee nursing homes pay.
Nursing homes pay the bed fee as a way to increase the amount the U.S. government pays in matching funds. It’s illegal for that bed rate tax to go toward anything other than increasing provider reimbursement rates, but the state is using the bed fee increase to fill its budget hole, the nursing homes say.
The department also failed to allow the public to comment when it changed the proposed rate reduction or published the fee schedule. That’s a violation of a state law requiring public participation in the rulemaking process, the lawsuit says.