Care providers sue State to halt Medicaid reimbursement cuts

Thursday, June 14, 2018

The Montana Health Care Association and more than a dozen of its members sued the state of Montana today, alleging violations of law in cutting Medicaid reimbursement rates for nursing facilities and assisted-living facilities.

The lawsuit names the state, the Montana Department of Health and Human Services and its director, Sheila Hogan. It seeks an injunction prohibiting the state from continuing to apply the lower rates the plaintiffs say were adopted improperly. It also asks a judge to order the state to take “any and all actions necessary to adjust payments” to properly reimburse the plaintiffs.

“The department violated the law when it adopted rules cutting reimbursement rates for Medicaid services in Montana,” said Rose M. Hughes, executive director of the MHCA, based in Helena. “The public is guaranteed a constitutional right to meaningfully participate in these kinds of decisions, but the department never gave us that chance. They repeatedly failed to provide basic information and their story about these cuts changed over and over again. These rate cuts hurt Medicaid recipients and care providers alike, and the stakes are too high for these kinds of decisions to be made without the public’s involvement.”

The lawsuit follows the 2017 Legislature’s budget cuts that prompted the department to propose lowering Medicaid reimbursement rates. Initially, the department proposed reductions of 3.47 percent that it said were necessary to implement budget cuts included in Senate Bill

261. It later reduced those cuts to 2.99 percent after many objections, including from the Legislature’s Interim Committee on Children, Families, Health and Human Services.

Initially, the lower rates were meant to last for only a matter of months, but the department later said it would extend the cuts through fiscal year 2019 - doubling the impact of the initial cuts. However, the department failed to justify the extension and intentionally denied the public an opportunity to review and comment on the decision. The MHCA said such public scrutiny would have proven the extension was unnecessary.

The MHCA contends the department violated a number of provisions of the Montana Administrative Procedure Act. Among other violations, the department failed to show that the specific amounts cut from reimbursement rates were reasonably necessary. The department also did not give the plaintiffs and the public an opportunity to meaningfully participate in these significant rate setting decisions, as required by law. The plaintiffs also contend that reduced rates fail to meet mandatory levels specified in the law.

"The department will point to increased nursing home rates to dispute our claims, but that is disingenuous, " Hughes said. "The fact is the nursing homes agreed to raise the taxes they pay by nearly double to support their Medicaid rates. The new taxes amount to nearly $5 million in the current fiscal year and over $10 million each succeeding year. The legislature approved the new taxes to pay for compliance with new federal regulations and to reduce the cost shift to people who pay for their own care. The tax legislation even says that the new money is to be used only to increase rates above the then current rates. Now the department is trying to take some of that tax money intended to help nursing home patients for other purposes."

The Pines of Polson, a 30-bed assisted-living center, is one of the named plaintiffs in the lawsuit. Admissions Coordinator Michael Coe said the facility is part of the lawsuit “because I don’t want to have to tell one more elderly person who needs our help that we cannot take more people on Medicaid.”

“Recently, I had to do that three times in one week,” Coe said. “It is heart-wrenching.”

Lisa Roberts, administrator at the Wibaux County Nursing Home, said small facilities always struggle even during the best of times. “But to have the federal government piling on new regulations while the state of Montana cuts Medicaid rates, has made it particularly difficult,” she said.

The MHCA is a non-profit association that serves long-term care. Founded in 1962, the association originally represented only nursing homes, but now represents over 100 organizations that serve elderly and disabled Montanans, both for-profit and not-for-profit. This includes skilled nursing and assisted living facilities.


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