Indiana Nursing Homes, Medicaid Patients, Protest Proposed Medicaid Reimbursement Cuts

"Scores of people" gathered outside a July 30 hearing at the Indiana Government Center to protest plans to cut Medicaid payments to nursing homes by about $25 million a year, the Indianapolis Star reports. With the state in a "budget crisis," Gov. Frank O'Bannon (D) seeks to save about $52 million annually, or 5% of the state budget, by cutting Medicaid payments to nursing homes. Once the state moves ahead with the cuts this fall, "inevitably" some of Indiana's 500 homes will close, the Star reports. Of the remaining homes, monthly rates for residents will likely increase, while staffing levels will likely fall. Although the state's nursing home industry is lobbying O'Bannon to "abandon the cuts" and find "new ways" of increasing the federal government's contribution to the Medicaid program, John Hamilton, secretary of the state Family and Social Services Administration, said the state will "forge ahead" with the proposed cuts. Because the planned payment reduction will only generate about $25 million in savings, or about half of what O'Bannon seeks, state officials are "looking for more cuts" to the Medicaid budget as well.

Industry Solutions
In addition to asking the state to seek additional federal funds, the state nursing home industry has "offered alternatives" to cutting Medicaid reimbursements. Saying that the state has overestimated the amount it will pay nursing homes next year, the industry has proposed that the state abandon the cuts in favor of an $825 million cap on state spending for the 2002 fiscal year. Should state spending exceed that amount, nursing homes would "guarantee" savings by repaying the state the difference. Also, the industry has suggested that the state issue taxpayer-financed bonds to "buy out" nursing home operators so that homes could be closed "through a planning process" with "less disruption to frail residents." Arthur Logsdon, president of the Indiana Health Care Association, which represents more than 350 "mostly for-profit" nursing home facilities, said, "If the state chooses, the state can avoid reimbursement cuts affecting nursing home residents altogether." However, the Star reports that "state officials are not rushing to embrace" the industry's proposals. Indiana officials have said that the industry's proposal to limit spending could result in litigation or "force some homes to make balloon payments," which could threaten patient care. In addition, state officials do not support requiring taxpayers to pay interest on bonds that benefit for-profit corporations. Despite plans to move ahead with the cuts, state Medicaid officials are continuing "closed-door" talks with industry representatives (Corcoran, Indianapolis Star, 7/31).