This article originally appeared in the Cincinnati Business Courier.
Imagine if you operated a business but had to charge the same rates as you did in 2018, or worse, in 2008?
Now imagine that you had to meet higher service levels with those same rates. How would you fill the gap?
Let’s complicate it even more: What if the services you provide are for the medically fragile with multiple health issues and our most vulnerable populations, those in need of high-quality care?
This is the dilemma for Kentucky Medicaid providers.
Kentucky Medicaid sets the rates but does not adjust rates annually. This means every year, regardless of how much costs have increased, the rate remains the same. If we experience 3% inflation, it is akin to a 3% rate cut. After three years, that can add up to a 9% cut. After 10 years, it is 30%. And that’s assuming inflation is 2% to 3% per year.
But this year, we are facing inflation rates we have not seen in decades. The outlook is frightening. The problem is compounded when you consider that the service requirements have not decreased but have increased over the years. And rightly so – we want the highest quality services for the most vulnerable populations we serve.
Some suggest we just need to be more efficient. I don’t disagree. It is our duty as nonprofits to operate as efficiently as possible. After all, tax dollars foot the bill, and we need to serve as many people as possible with those dollars.
But there is a limit. At some point, you must decide, is it quality or is it quantity? When rates don’t keep pace with the cost of doing business and remain flat year after year, something must give.
What gives is one of three things:
- Do more with fewer staff
- Pay less
- Stop providing the service
The last option is unthinkable. Medicaid was designed for the medically fragile and vulnerable people. During the pandemic, when some of these services shut down, the hardship on these individuals, their families and caregivers was immense. These services are essential for their well-being.
So that leaves “Do more with less” or “Pay less.” Either way, the workforce that we expect to care for the most vulnerable among us carries the burden of Medicaid rates that have failed to keep pace with the market. What’s more, it’s still not enough to cover the gap. Nonprofits must raise funds through grants and donations to cover the gap.
At Redwood, we have to raise more than 12% of our annual budget just to cover basic operating costs not covered by the rates. That’s a huge expense.
I believe the goal of most Medicaid providers is the same as the state: To provide the highest quality care at the lowest possible cost to serve as many people as possible with the tax dollar. I know this is Redwood’s goal. To achieve it, we need rates that allow for reasonable compensation and are adjusted annually for inflation and new requirements.
I am incredibly thankful to the Kentucky House of Representatives, which included significant rate increases for Medicaid waiver services in its budget bill. I encourage Kentucky senators to follow suit.
If we truly believe our Medicaid programs are essential and if they serve the state’s most vulnerable populations, then it’s time to put the money toward what we value most.