Albany Acts- But Call Me Scrooge!

The State Legislature and Governor finally reached an agreement on a deficit reduction plan for fiscal year 2009/10. The news is good (at this point in time), but call me Scrooge as I will hold off any personal celebration until a few more unknowns come to pass. First the good news:

• Yes, most of the proposed deficit reduction plan items (10% and 3.7% rate cuts, delay in implementing the 2009 rebasing rate and 2010 regional pricing rate, .5% cash receipt assessment increase) were rejected. These items were included in our Kirkhaven "worse case" scenario Medicaid rate projection for 2010 (Medicaid estimated rate of $155.30). Therefore, our moderate or even best case scenario Medicaid rate for 2010 ($163-171) are "back in play".

• Yes, with the 2009 Medicaid rebasing rate still in law, we should expect to receive a revised 2009 rate retroactive to April 1, 2009.

Now the reality check where I play the part of Scrooge:

• We still have no further guidance on when the April 2009 rate will be paid and what the rate will actually be. This is a continuation of the issue that has plagued us all year long. We have rate methodology estimates that suggest the rate will be good for us ($171/day versus the $155.30 currently paid), but it is an estimate at best and we can't keep paying out expenses at our current level while we only receive the deflated $155 rate. Cash flow is an issue and we still may need to take immediate action to level our cash flows despite the expectation of a retroactive Medicaid payment of approximately $300,000 for 2009.

• We still have no further guidance on the April 2010 Regional Pricing Medicaid rate or methodology. This is also a continuation of the issue that plagued us with the development of a meaningful 2010 budget. We have estimates that suggest that Regional Pricing could be good for us, but it is very subjective and based on limited actual data or facts. While our moderate and best case scenario budget projections appear more viable based on the recent action by the legislature, we are still in the same waiting game as before and until actual rates are issued and paid, we have an operating challenge to meet cash flow needs in the interim.

• By the Governor's own admission, the action by the Legislature still falls short of meeting the State's needs. Therefore, we can expect more of the same with respect to delays and threats to our future Medicaid rates. We just seem to be always treading water and never seem to find dry land where we can finally move on.

With respect to what the Legislature did pass:

1. The elimination of the 1.7% Medicaid trend factor for the first quarter of 2010 obviously removes cash from our future operation, but does not impact our 2010 Medicaid rate projections as we had the foresight not to include a trend factor in our rate projections.
2. The HEAL-NY payment delays has no operational impact for us, but does send us a message that the likelihood of future HEAL-NY grant opportunities is probably non-existent until 2011 at best. This certainly impacts the timing of our KH Replacement Project, which is contingent upon HEAL funding.
3. Increase in Fraud & Abuse recoveries has no immediate impact on our operational budget but does send a scary message that we can expect more scrutiny and audit recoveries from not just blatant acts of fraud (of which we support), but money grabbing schemes aimed at innocent and outrageous documentation and procedural omissions.

In short, the news is good compared to what was on the table, but many of the critical question marks related to our 2009 and 2010 rates and HEAL-NY funding access for the KH Replacement Project continue to remain unknowns. The continued delay by the State to address these will have the impact of our needing to implement a deficit reduction plan of our own at Kirkhaven in order to meet cash flow requirements. I'll keep you apprised of any further developments. Happy Holidays!