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Legal analysis says Medicaid rate cuts to nursing home industry would violate federal law


By Sean Whaley, Nevada News Bureau: A legal analysis provided to the skilled nursing home industry regarding a proposed Medicaid rate reduction to cover the cost of caring for Nevada’s seniors says the cuts would be a violation of federal law.

The analysis says the proposed reductions of $20 per Medicaid resident per day are being proposed in Gov. Brian Sandoval’s budget, “purely as a means to alleviate the budgetary crisis.”

Because Nevada has not performed the analysis required under federal law before such rates can be reduced, the cuts would be in violation of federal law in the jurisdiction of the 9th U.S. Court of Appeals, which includes Nevada, the analysis says.

“Therefore, the rate reductions, if implemented, will be a violation of federal law and will leave Nevada vulnerable to a series of costly legal challenges, which could well result in imposition of an injunction against the rate reductions, given the current judicial precedents,” the analysis says.

“The unlawful rate changes could also affect federal funding of Nevada’s Medicaid program,” the analysis says. “Therefore, the legislators must find alternate means of balancing the budget that do not include reducing rates to Medicaid providers.”

The memo from the legal firm of Lionel, Sawyer & Collins to Charles Perry of the Nevada Health Care Association, the organization that represents Nevada’s skilled nursing home industry, was provided to the Senate Finance Committee.

The committee took testimony on Senate Bill 54, which would change state law regarding a nursing facility provider tax to allow for the Medicaid rate reductions. The panel did not take action on the bill, which is being sought by the Sandoval administration.

The tax was implemented in 2003 with the support of the industry to improve the quality of care provided to Medicaid recipients living in skilled nursing facilities. It was intended to provide funding over and above the support in the general fund budget. SB54 would eliminate this requirement and save the state general fund about $10 million.

The panel was also told by nursing facility representatives that there are now two homes that are looking at closing if the reduction is approved by the Legislature. Initially the industry said as many as five facilities might close.

Charles Duarte, administrator of the Division of Health Care Financing and Policy, testified in support of the bill. But he acknowledged he has concerns that if the reimbursement rates are reduced, more issues with the quality of care provided to nursing home residents could arise.

Duarte said he is aware of the suggestion by industry representatives that some facilities could close if the reductions take effect, but that the agency would have to wait and see what the effects would be.

Sen. Sheila Leslie, D-Reno, said if closures do occur, those affected will be vulnerable elderly people and their families.

“It bears watching,” she said.

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