Yes Virginia, There is a Santa Claus!

If you have been following my Blog, you know that we have been waiting (not so patiently) for the State to issue our new 2009 and 2010 Medicaid rates. This past week nursing homes finally received written notice of their 4/1/09-12/31/09 and their initial 1/1/10-3/31/10 Medicaid rate.

As a quick refresher, the new rates were to incorporate several new rate-setting methodologies that would ultimately result in both winners and losers among nursing homes across the state.We were hopeful that the preparation and work we have put in over the past 2 years, to help maximize our Medicaid rate reimbursement, would make us a winner and result in a higher rate for us.


Although we had some guidelines to make some reasonable estimates, not enough was known to compute an accurate rate for 2009 or 2010. Until the actual rates would be published, we opted to use the existing rate of $ 155 for the 2009 interim financial statements and established 3 budget scenarios for 2010 using a worse case ($155 rate), moderate case ($163 rate) and best case ($171 rate). Based on these scenarios, we estimated we would need to enact a deficit reduction plan of $300,000 under the moderate case and a $600,000 reduction plan under the worse case.

Well it looks like Christmas may have come late for Kirkhaven this year. Both our 2009 and 2010 rates calculate to $183.00/day (better than even our best case scenario). This should result in a retro settlement payment for 2009 of around $ 750,000 . That will pay off our $500,000 line-of-credit and other short-term borrowings and bring us to a decent surplus with our 2009 financial performance .


For 2010, the $183 rate will eliminate our need to enact any immediate deficit reduction plan, and result in enough of a surplus to resume fully funding our depreciation expense (reserving for future capital replacements) and perhaps enact a wage increase for staff. How and when we would spend any projected surplus will still need to be evaluated and approved by the board.


The issue still for 2010, is that the $183 rate is only "solid" until 4/1/10, at which time a whole new rate methodology (regional pricing) is expected to be put in place. Similar to what we just went through in 2009, nobody really knows the impact of this methodology and thus our rates could go down, up or stay consistent. Since the 4/1/10 rate will have a significant impact on our 2010 budget assumptions, we may have to still be cautious with granting wage increases or other spending until we have a clearer picture.


Regardless, we are at a much better place now than we were before. 2009 has been salvaged and 2010 is off to a good start. We still don't know when these new rates will actually be paid. They must be approved by CMS and run through the Medicaid administrative process. It could be weeks or months but as far as we know, it is just a matter of standard process and protocol. I'll be "dancing on the tables" when we actually receive the cash, but in the interim, I'm still smiling on the inside and will sleep a little sounder.


Kudos to all the staff at Kirkhaven who have worked tirelessly and professionally as new strategies, policies and procedures have been implemented in preparation for maximizing our reimbursement rates. Our higher rates are not an accident or a whim, we earned them!

Yes Virginia, there is a Santa Claus!