Nevada Can Reduce Medicaid Rates and Save $60 Million

(Sean Whaley/Nevada News Bureau) – Nevada Health and Human Services Director Mike Willden said today he believes the state can reduce Medicaid rates to medical providers as proposed in Gov. Brian Sandoval’s budget, but acknowledges the issue is “muddy territory.”

Willden’s view suggests the Medicaid reductions can be imposed without the state being subjected to successful legal challenges based on a recent appeals court ruling.

A 9^th Circuit Court of Appeals ruling rejecting Medicaid provider rate cuts in California did not provide guidance on how to impose such reductions based on a reasonable access standard, he said. Nevada is included in the 9^th Circuit Court’s jurisdiction.

The Medicaid rate reductions recommended for a variety of medical providers would save nearly $60 million in general funds over the two-year budget.

If the reductions cannot be implemented for Nevada health care providers, there would be another funding gap in Sandoval’s budget.

The U.S. Centers for Medicare & Medicaid Services (CMS) is working on the issue of reasonable access standards but does not expect to have final guidance for states until the summer, after the Legislature has finalized its two-year general fund budget, Willden said.

“The court did not provide any definitive road map,” he said. “We don’t know what the reasonable access standard is. We believe we can reduce the rates.”

At a Senate Finance hearing today on Medicaid reductions proposed for the skilled nursing industry, lawmakers were given a legal opinion saying the cuts would violate federal law based on the 2010 appeals court decision.

The analysis by the legal firm of Lionel, Sawyer & Collins says the proposed reductions of $20 per Medicaid resident per day are included in Sandoval’s budget, “purely as a means to alleviate the budgetary crisis.”

The cuts to reimbursements for skilled nursing facilities would save about $10 million in general funds over two years.

The appeals court ruling said reductions are allowable but must first be analyzed to ensure the rates are reasonable.

The legal opinion said no such analysis has been done by the Department of Health and Human Services for Sandoval’s proposed reductions.

“Therefore, the rate reductions, if implemented, will be a violation of federal law and will leave Nevada vulnerable to a series of costly legal challenges, which could well result in imposition of an injunction against the rate reductions, given the current judicial precedents,” the analysis says.

The cut is one of several Medicaid rate decreases proposed for many types of medical providers as a way to help balance Sandoval’s proposed $5.8 billion general fund budget.

Willden said the legal issues involve all the proposed provider rate reductions in the budget, not just the $20 per day per Medicaid resident cut aimed at the skilled nursing industry.

“We’re hanging our hat on the U.S. Solicitor General’s amicus (friend of the court) brief to the 9^th circuit saying we need access standards and they need to be reasonable,” he said. “CMS is doing that. That process is ongoing.

“It is a tough issue to wade through,” Willden said. “It is certainly muddy territory.”