Arkansas Study Challenges Nursing Home Rates Increases, Prompting Governor to Seek Changes in Private-Pay Requirements

Arkansas Gov. Mike Huckabee (R) has ordered the state Department of Human Services to file a waiver request with the Centers for Medicare and Medicaid Service (formerly HCFA) permitting changes to a state policy that prohibits nursing homes from charging "private-pay" residents less than Medicaid rates, the Arkansas Democrat-Gazette reports. While the waiver, if approved, would allow homes to charge private-pay patients 20% less than Medicaid rates, it would not "compel" facilities to lower their rates for private pay residents, the Democrat-Gazette. Huckabee's waiver request was announced in conjunction with the release of results from a state investigation into "unfair pricing" of Arkansas nursing home rates. Huckabee said that the study found that 68% of state homes had increased rates -- with increases ranging between $5 and $53 per day -- for private-pay residents "without any state requirement [to] do so." Huckabee said many of the homes "capitalized" on a new state "bed tax" to justify an increase in their rates for private-pay patients (Rowett, Arkansas Democrat-Gazette, 7/19). The tax charged nursing homes $5.25 per patient per day until July 1, when the tax was raised to $5.63, to fund an increase in Medicaid rates to nursing homes. Medicaid reimbursement jumped from $69 a day to about $89 per day after the tax and a new cost-based system took effect. The Associated Press reports that nursing homes were permitted to pass the cost of the tax to private-pay residents (Jefferson, Associated Press, 7/19). But Randy Wyatt, executive director of the Arkansas Health Care Association, said the increases for private pay residents were caused by higher Medicaid reimbursements and the "new reimbursement methodology," which is based on "actual" costs of care (Arkansas Democrat-Gazette, 7/19). He added, "I don't believe that a single home has exorbitantly raised their rates arbitrarily" (Associated Press, 7/19).

Controlling Costs, Other Initiatives
Huckabee said that since the state does not have the authority to "cap or otherwise regulate" private-pay rates, nursing home residents, their families and the press should pressure "nursing homes to justify the rates." He added it would not be "appropriate" for state officials to take "action" on the rates (Arkansas Democrat-Gazette, 7/19). However, state Sen. Jim Argue (D) said the governor's explanation of the rate increases was "not a wholly satisfactory response," adding, "Nursing home care is really not a matter of free-market economics. In a small Arkansas community, you don't have a lot of nursing homes to choose from." In addition to the waiver request, Huckabee also ordered DHS officials to review the permit process for approval of nursing homes and to "ensure" the state is "emphasizing alternatives" to nursing facilities for private-pay residents, such as assisted living and adult foster care (Associated Press, 7/19). Huckabee also said he wants to "enhance efforts" to help nursing homes use new "flexibility" in the state's Medicaid policy to lower rates for those with "financial hardships" and those who require "lower levels of care" (Arkansas Democrat-Gazette, 7/19).