HELENA — Montana Gov. Steve Bullock’s administration is complying with a judge’s order to temporarily reinstate previous Medicaid reimbursement rates for nursing homes and assisted-living facilities, but will staunchly defend the rate cut made by the state health department, the governor’s budget director said Monday.
Dan Villa said the state Department of Public Health and Human Services is notifying the nursing facilities and others that provide services to Medicaid patients of the change after a Helena judge last week temporarily blocked the rate cut made by the department in January.
Villa, speaking to state lawmakers on the Legislative Finance Committee, said he hopes to resolve the lawsuit quickly because of the potential cost to the state.
“Certainly, the state will vigorously defend Montana taxpayers from this lawsuit,” he said.
The lawsuit by the Montana Health Care Association and nursing facility owners challenges the health department’s decision to reduce Medicaid provider reimbursement rates by 2.99 percent to an average of $181.57 per patient, per day, as a part of statewide spending cuts to fill a budget shortfall.
District Judge James Reynolds last week ordered the state to temporarily reinstate the $187.17 rate that was in place before the cuts at least until a July 11 hearing in the lawsuit. The rate difference can be more than $100,000 a year to nursing homes that care for dozens of Medicaid patients.
Montana Health Care Association executive director Rose Hughes said none of her members had been notified of the health department’s compliance with Reynolds’ order as of Monday afternoon.
The lawsuit alleges the department’s rate cut violates state law because health officials did not show a “reasonable necessity” for them, explain how they were formulated or allow the public to fully participate in the decision.
Their lawsuit also claims the cuts should be invalidated because they conflict with a state law that raised a bed fee paid by nursing homes.
It’s illegal for that bed fee to go toward anything other than increasing provider reimbursement rates, but the state is using the fee increase to fill its budget hole, the nursing homes say.
The law says the fee must be used to raise the Medicaid reimbursement rates in the 2018 financial year, which ends June 30, above the rates for the 2017 financial year.
Villa told the finance committee that the state is in compliance with the law because even with the 2.99 percent cuts, providers are still reimbursed more than they were a year ago.
Hughes said Villa is wrongly interpreting the law, and that all bed fee money must go to raising the reimbursement rate and not to plug any budget holes. “Every dollar is to go to an increase,” she said.
The health department plans to increase Medicaid provider rates next year to about $196 per patient, per day, Villa said.
“I think it is important for everybody to understand the numbers involved,” Villa said.
Hughes said the proposed $196 rate amounts to a continuation of the cut because the rate should be $202 per patient, per day, with the bed fee.
Both rates are still well below the actual estimated cost of care, which next year will be about $230 per patient, per day, Hughes said.