‘It’s a significant hit’—Local care provider faces another rate cut from MCO
by Beth Kraft
Frustrations with forced financial realities continue for many who own and operate group homes and community based residential facilities (CBRFs) for people with varying degrees and combinations of cognitive, physical and mental health disabilities.
Mary Jo LaBair, who is entering her 35th year as owner/operator of Garlick’s CBRF in Mondovi, says a recent rate cut handed down by Inclusa, a managed care organization (MCO) affecting half of her residents just doesn’t add up.
As of April 1, room and board rate cuts were handed down by Inclusa for 10 residents, reducing the reimbursement rate to LaBair in some cases to just $16 per day. That equates to about $480 per month for those residents to cover a room, furniture, utilities and meals. Rent alone for most apartments in Mondovi starts at $500.
The worst part, Garlick’s administrators say, is there was no opportunity to negotiate with Inclusa on the new rate.
“You accept the new rate or you get nothing,” said Sarah Odegard, Program Director. “There was no discussion.”
For some residents the room and board rate was slashed by as much as $7 per day.
“We’re not talking 10 cents,” Odegard added, “so it’s a significant hit.”
And if Garlick’s didn’t agree to the new rates via a new authorization for each resident, “then you get zero,” LaBair said.
Inclusa was the only MCO to announce a rate cut, she added.
The cuts to room and board are on top of struggles Garlick’s and other CBRF facilities have had with MCOs over care and supervision rates, which have been stagnant or declining for many care facilities—forcing some to close their doors.
Two years ago, nearly 50 owners, operators and employees from care facilities all across northwest Wisconsin convened in Mondovi to vent their frustrations and brainstorm potential solutions to their shared financial crisis. They have since continued to communicate as a group with about 10-15 “very active” members, LaBair said.
Inclusa’s recent room and board rate cut prompted even more chatter from other owner/operators who have been following along on the email chain.
Some takeaways from their recent conversations indicate the situation hasn’t improved much for anyone. Primarily, the average cost of living continues to increase while room and board and supervision rates are down.
“We have not had a raise in eight years,” LaBair said of herself and her administrative staff. “My wage is pathetic.”
In fact, it took the release of DHS Direct Care Resource funding last year to finally get some of her care workers up over $10 per hour. Some of her 35 CNAs work a second job, and some still require assistance from the food pantry to make ends meet.
“That’s so wrong,” LaBair said. “You can go work at McDonald’s for a better wage than a group home can provide.”
The low wage her business can afford to pay care workers keeps LaBair up at night—literally. Not only is it difficult to find and retain qualified staff that can handle the responsibilities associated with the job—including care for residents who can be combative—but the financial strain forced her to cut three full-time positions a few years ago, putting the workload on herself and other admins.
“We’re 24/7,” she said.
Unless something changes with reimbursement rates, it becomes increasingly difficult to keep the group home business’ seven facilities afloat.
“I can see it in the checkbook already,” LaBair said. “I have to be a good steward of the money.”
Cuts to 13 areas were handed down to Garlick’s by Inclusa. One resident received a rate cut double-whammy—reductions to both room & board and care & supervision. That resident can be physically aggressive toward staff and roommates and must be housed alone. It’s in the best interests of everyone’s health and safety, LaBair says, but not financially.
In another case a resident who is on hospice care had their rate cut by Inclusa.
Is Inclusa playing off the compassion care providers have for their residents, knowing they won’t kick an established resident out for a too-low rate?
Odegard and LaBair say, ‘yes.’
“They (Inclusa) know caregivers aren’t doing it for the money,” Odegard said. “But they are. It’s enough to make your blood boil.”
The only recourse they have is to turn away new residents if the numbers don’t add up.
“We’ve learned not to accept new residents for rates that are too low,” Odegard said.
“We’re not asking for a handout; we’re asking for a fair rate—the cost of doing business,” LaBair added.
The kicker in the whole situation: Inclusa continues to show profits while cutting funds paid to care providers like Garlick’s.
According to financial information reported by Inclusa to DHS alongside other Wisconsin MCOs, the company’s validation rate increased and they continue to show a profit margin.
For the third quarter of 2019 (the latest available) ending Sept. 30, Inclusa reported income from operations at $8.5 million for the calendar year to that point—well above all but one other MCO. Inclusa also features the highest administrative cost at 4 percent while others are around 3 percent, perhaps accounting for large raises for Inclusa higher-ups two years ago.
Another kick to the gut: group home workers who continue to perform their duties during COVID-19 won’t see any wage increase and could be forced to work overtime if other care providers come down with the virus.
“We should be getting extra money to give the staff hazard pay right now,” Odegard said.
And while other MCOs are working diligently with care providers to secure personal protective equipment (PPE) for CBRF needs, Garlick’s staff say they haven’t gotten any help from Inclusa.
Mark Hilliker, Chief Executive Officer of Inclusa, said in a phone interview Monday the organization is working on ways to support providers during the COVID-19 pandemic.
Hilliker also explained the April 1 change to room and board rates was due to updating the U.S. Dept. of Housing and Urban Development (HUD) rates from 2017 to 2019. Those rates are used to subsidize costs for residents who can’t pay the full amount for care. The balance is then subsidized by Inclusa to the tune of several million dollars per year, he said.
“That’s a pure cost to our organization because it’s not reimbursed by Medicaid,” Hilliker said.
Overall across the organization, room and board rates increased, Hilliker said, though conceding there were some that dropped.
Given that those costs for care typically range from $644 to $1,300 per month with Inclusa, the room and board rate Garlick’s is receiving appears to be “on the low side,” he said.
Calculating room and board rates is all formula-based using the HUD rate, so there’s “not a whole lot of control over the methodology,” Hilliker said.
There is opportunity for negotiation “to try to come to an adequate solution,” he added. “We try to stay true to the methodology because we’re reimbursed by the state via Medicaid dollars.”
That funding “has been pretty static” in recent years, Hilliker noted, and is part of a long-term solution to the financial picture.
The organization has more control over the care and supervision rates—cuts to which prompted the formulation of the care provider group headed up by Garlick’s two years ago. Yet Hilliker reports that Inclusa invested $8.5 million into resident rates.
“We’ve been looking to invest in our providers across the region,” he said.
Division of that funding could be creating winners and losers.
“Ultimately our goal as a MCO is to do what we can to support sustainability across the system,” Hilliker said.
The MCO strives to “work collaboratively” to address issues care providers are experiencing and encourages outreach to work through financial struggles.
“We’re always willing to sit down and talk about member-specific situations,” Hilliker said.
LaBair says she’s sought help from DHS itself and even local legislators, but her concerns have yet to gain traction.
“They all pat you on the back,” she said.
DHS has advised her to ensure clear communication with its MCOs like Inclusa—a difficult process, LaBair says—and advised that reimbursement rate decisions lie with the policy committee.
In the meantime, Garlick’s plans to continue to collaborate with other care providers for ideas to ease the financial strain.
“These ‘ma and pa’ outfits really have it tough,” LaBair said. “It’s going to be very, very hard.”