Why do lawmakers’ intentions for nursing home funding keep falling short?

The state’s Division of Medicaid Services launched a massive outreach campaign well before the end of pandemic protections last March, reminding Medicaid beneficiaries they needed to have their benefits redetermined. (Getty Images)

The opacity of the New Hampshire budget process can defeat the good intentions of those involved with it.

Case in point: Prior to last year’s legislative session Gov. Chris Sununu shared the heartening news that his biennial budget proposal would raise Medicaid rates 3 percent each year. Legislators embraced that increase in the budget bill known as House Bill 1 . And then they added additional funds for Medicaid providers in the budget trailer bill known as House Bill 2 . Providers were very grateful.

For nursing homes, the second-year total in HB 1 was 3.5 percent higher than in the first year, to which would be added HB 2’s “$9,355,958 in the fiscal year ending June 30, 2025 for the purpose of increasing rates paid to nursing homes.”

However, on July 1, the beginning of the next fiscal year, the projected increase for the average nursing home care rates is only 2.89 percent.

If this was the first time legislative intentions for nursing home funding fell short it would be bad enough, but it happened in the prior budget, too. On July 1, 2022, an intended 5 percent increase became an increase of less than 1.02 percent, which the Department of Health and Human Services (DHHS) – to its credit – had to then work to rectify.

So, what’s going on here?

I’m not as smart about the state’s budget process as those at the New Hampshire Fiscal Policy Institute , but I would posit the budget’s very format – basically an interminable Excel spreadsheet of numbers – is hard for anyone to understand. The nursing home appropriation is found on page 561 of a 740-page document. It only lists dollars, not rates.

Compare this to, say, the state of Washington. There, the budget document goes into granular detail, making it clear, for example, what “the weighted average nursing facility payment rate” will be each year and exactly what it will be comprised of. Thus, any nursing home provider in Washington can comfortably budget for two years knowing what can be afforded under Medicaid, barring a recession that forces a budget revision.

We ask a lot of our legislature of unpaid volunteers. To expect them to know exactly how an aggregate dollar figure will translate into reimbursement rates would be expecting too much. Because that funding is filtered through a complicated system where facilities are paid according to the average complexity of residents’ medical needs, which can go up or down.

However, what makes Medicaid rates always go down in New Hampshire is a contrivance called a “budget adjustment factor.” For July 1, this variable factor will subtract 28.76 percent from a Medicaid rate that would fall well short of care costs even if paid in full. Thus, for example, a Manchester facility that would have gotten a 5.74 percent increase gets a .44 percent increase. A Laconia facility that would have received a 3.92 percent increase instead gets a 1.29 percent decrease. Yet, if the recent past is prologue, wage costs alone may go up 6 percent in the next year.

Most New Hampshire nursing homes are already operating at a huge loss; indeed, New England’s second-worst margin. They need a July 1 funding increase like Florida’s 8 percent. Instead, on July 1 their average daily Medicaid rates will be $155.90 per resident less than even North Dakota’s. This is untenable. If nursing home care is to have a future in the Granite State, policymakers must get a grasp on its recurring Medicaid funding problem.

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