Medicaid Formula ‘Transformed' Nursing Homes

by Gwen Moritz  on Monday, Apr. 8, 2013 12:00 am  

Jim Cooper

Three quarters of Arkansas’ nursing homes were profitable in the fiscal year that ended in June 2012, a testament to the Medicaid formula developed in 2001 to reimburse the actual cost of patient care.

The Medicaid formula “has transformed us into the envy of the region,” said Jim Cooper, immediate past president of the Arkansas Health Care Association and chairman of its legislative committee. “We have increased our staffing by almost double. We have increased our wages and our benefits. Our food’s better, our buildings are better. … No longer do people think of us as cinderblock buildings with three people in a room.”

Full-year cost reports for fiscal 2012 were available from the Arkansas Department of Human Services for 183 of the state’s 225 nursing homes; cost reports were not available for new facilities or facilities that changed ownership during the fiscal year. Of those 183, 136 were profitable. The average net income for the year was about $427,000, although net income per bed ranged from less than $20 to more than $33,000.


Read this week's lists of the most-profitable and least-profitable nursing homes in Arkansas. Download a free printable PDF or purchase a spreadsheet version of the most-profitable list in the store.

Most-Profitable Arkansas Nursing Homes: PDF | Spreadsheet
Least-Profiable Arkansas Nursing Homes: PDF


The most profitable was Davis Life Care Center in Pine Bluff, where the bottom line changed from a loss of $691,000 in fiscal 2011 to net income of more than $6 million in 2012. A call to the administrator seeking an explanation for the swing was not returned, and Cooper said he had no explanation because Davis Life is not a member of AHCA.

The average annual loss for the 47 facilities that were unprofitable was $190,000. The 183 nursing homes for which net income was available generated total profits of more than $49 million on revenue of almost $804 million in fiscal 2012.

The Medicaid reimbursement formula depends on a bed tax — officially, a quality assurance fee paid by private-pay patients — that has tripled from $5.25 a day in 2001 to about $16 a day in 2013, or more than $5,800 a year. The state Medicaid program uses that bed tax money to draw down additional federal matching dollars, and Cooper said Medicaid payments to nursing homes have more than doubled to $670 million a year without any additional cost to the state’s general revenue.

Similarly, the Medicaid reimbursement rates paid to nursing homes have doubled and in some cases more than tripled during the past 12 years. The average daily rate being paid for January-June 2013 — which is weighted to account for overpayments or underpayments the previous year — is $165, compared with $69 a day before the bed tax was adopted. The highest weighted rate, $193.05 per day of care for a Medicaid patient, is being paid to Jonesboro Healthcare Center; the lowest, $120.97, is being paid to White River Health Care at Calico Rock.

The number of nursing home patients in Arkansas has remained stable at about 18,000 on any given day, Cooper said, but the profile of those patients has changed dramatically in the past decade.



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