At Nursing Homes, Fears of a Budget "Armageddon"

The Texas Legislature is faced with a budget challenge that pits the Republican majority’s desire to cut government spending against a vulnerable target: nursing homes. 

Since the passage last month of House Bill 1, the general appropriations bill for the next two years, the prospect of displacing the frail and the elderly has become a politically charged issue.

Late Thursday, the Senate Finance Committee defied the House’s more conservative spending blueprint by restoring seven percent of funding to the Medicaid budget for nursing home reimbursements. That would keep their funding levels the same as the current biennium. It is hopeful news for the industry, which has been bracing for the worst. The full Senate and the House still must approve the committee’s decision, so the budget battle is far from over.

Before Senate budget writers took action in committee, HB 1 proposed reducing Medicaid reimbursement rates for all providers in Texas by 10 percent. Under that plan, nursing homes would be hit even harder. The industry has crunched the numbers and state officials confirmed they could be short the amount they would need to fully cover provider rates by a total of 33 percent, or $1.2 billion. That discrepancy is caused by three major factors: less general revenue, anticipated case load growth and fewer matching dollars from the federal government.

Nursing home advocates say the shortfall could lead to the closure of nearly half the state’s 1,100 nursing facilities and the layoffs of nearly 60,000 workers, resulting in the removal of nearly 46,000 residents.

Leslie Stratton, executive director of Cedar View Rehabilitation and Healthcare Center in Austin, started making regular visits to the Texas capitol this session to lobby against the cuts. She said that more than half of the 93 residents in her facility rely on Medicaid.

“I don’t think they truly understand what we do on a day-to-day basis,” Stratton said of lawmakers. Most families “are not equipped to deal with the level of care that these elderly need,” she said.

The care provided in-house ranges from feeding, changing and bathing residents multiple times per day to physical therapy and medical procedures like IV drips, dialysis, and the use of negative pressure therapy to treat open wounds such as bed sores.

William Ehrle, 53, of Austin, has lived at Cedar View since late 2009.

“The food is going to be lacking; the staff is going to be overworked,” said Ehrle, a former lobbyist at the Capitol who received a cancer diagnosis 11 years ago. He suffered a stroke during chemotherapy that paralyzed the left side of his body, and Medicaid became his lifeline. The lingering effects have included slurred speech and a tendency to fall. He said his only goal was to walk soon so that he could return home to his girlfriend.

“These people are just here, and none of them want to be here,” he said of Cedar View residents. “They’d love to be back with their families, but they just can’t. Their families either won’t or can’t take care of them.”

Derek Prince, the president and chief operating officer of Cedar View’s parent company, Mason Health, also serves as vice chair of the Texas Health Care Association. He said nursing homes statewide have already cut spending by millions, but he believes further cuts will compromise patient care.

Prince characterized the current crisis as “an Armageddon” situation for his industry, especially since the government created a system that strips residents of their assets in order to qualify for Medicaid services.

Diana Creamer of Austin, another resident at Cedar View, was involved in a motorcycle accident in 2007. Paralyzed from the mid-torso down, Creamer said her streak of bad luck continued when her husband left her and she lost her home. At the age of 52, skin sores and muscle spasms have become part of her daily existence; she must use a wheelchair. An additional Medicaid cut, she said, would be a “different level of hell.”

“It’s abject cruelty to have these cuts being made to people that desperately need this,” Creamer said, as her voice started to crack. “It’s even scarier for the residents that are here who are clueless as to where they are, who can’t feed themselves.”

State Rep. John Zerwas, R-Simonton, the chair of a budget sub-committee on health and human services, said HB 1 should be viewed as a proposal, not as a finished document. “We’re looking to the Senate to come forward with some numbers that would allow us to work with them and get us in a place that’s comfortable for everybody,” he said.

In the Senate Thursday evening, the budget-writing committee voted to preserve current financing levels for nursing facilities. It remains unclear where that money will come from and whether the House will approve. 

“We are not going to throw the elderly in the streets,”  state Sen. Jane Nelson, chair of the Senate Health & Human Services Committee and member of the finance committee, said earlier this week before the committee's latest action. 

Until lawmakers reach a final compromise, Texas’ Medicaid administrators have limited options: They could cut provider rates at the front end, or come to the Legislature in 2013 to request money to cover the previous biennium’s expenses.