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Pleasant Acres benefits from federal Medicaid funding
The York County-owned Pleasant Acres Nursing & Rehabilitation Center benefited this year from a complex federal Medicaid reimbursement program that had been outlawed in the state since 2009.
York County is projected to surpass its 2016 budget in terms of expenses and revenue, but both disparities are almost entirely tied to the program, which wasn't originally on the budget.
The nearly $4.5 million figure appears under expenses as an intergovernmental transfer, or IGT, for Pleasant Acres and under revenues as "transfers from other fund."
Under the program, the county gives money to the state Department of Human Services (DHS), which takes that money plus matching federal funds, keeps a certain percentage and gives the rest directly to the nursing home. The nursing home then repays the county the exact amount that it had paid to the state while keeping the extra funds for its Medicaid patients.
The federal Centers for Medicare and Medicaid Services (CMS) sets an upper payment limit on Medicaid matching funds to states, but DHS needs that infusion of funds from the county to reach that upper limit and trigger the matching federal funds, according to a DHS spokeswoman.
For example, if CMS is willing to pay a state $250 per Medicaid patient, but the state only has enough money on hand to pay $200 per patient, CMS will only pay $200 per patient. But if the county sends the remaining $50 per patient to the state, it can draw the full $250 per patient from CMS.
The use of Medicaid IGTs had been outlawed in Pennsylvania since 2009, according to Ronni Burkhart, the DHS assistant fiscal management director, but it returned for the 2015-16 fiscal year.
Burkhart said CMS had found numerous issues with the way the program was being run in the state, including counties taking out loans to pay the initial fee to the state.
A 2001 audit posted on the CMS website shows that the federal Office of Inspector General determined Pennsylvania was using the program "as a financing mechanism designed solely to maximize federal Medicaid reimbursements."
The audit concluded that the state generated $3.1 billion in federal matching funds without any corresponding increase in services to Medicaid residents of county-owned nursing facilities.
Similar audits were conducted for a number of other states' use of Medicaid IGTs, the CMS website shows. A CMS spokesman did not respond to questions about whether other states were disallowed from using it.
Mark Derr, county administrator, said the county paid the initial $4.5 million to the state DHS from its general fund with the assurance that it would be fully reimbursed after the money had flowed to Pleasant Acres.
Who benefits? According to the agreement between the county and DHS, the department used about $3.3 million of the payment to trigger the federal matching funds, which account for about 52 percent of the resulting $6.85 million payment to Pleasant Acres.
After repaying the $4.5 million to the county's general fund, Pleasant Acres ends up with $2.35 million in additional Medicaid funding, according to the county's budget.
Derr said the county benefits because, though the total exchange results in a zero-sum gain for it, the extra federal funding means it can reduce its own subsidies to Pleasant Acres.
The nursing home is projected to finish 2016 more than $1.2 million under budget, which Derr attributes to the IGT agreement.
The county plans to execute a similar Medicaid IGT in 2017, but those projected funds are now included in the overall Pleasant Acres budget as opposed to separate items.
The nursing home is projecting a $2.15 million gain from the transfer next year, according to the budget.
The county's current 2017 budget plan — which contains a $7.3 million deficit — projects costs of about $7.97 million for the nursing home. That figure is about $300,000 higher than last year.
The county is expected to finalize its budget on Wednesday.
State impact: The state keeps $1.2 million from the county's initial payment to offset the county's obligation to cover 10 percent of nonfederal funding for public nursing home care and add to the department's general fund, the agreement states.
DHS spokeswoman Rachel Kostelac said 23 county nursing facilities took advantage of the return of Medicaid IGTs during the 2015-16 fiscal year.
Burkhart said she doesn't know exactly how much money the state missed out on by not being allowed to participate in the program since 2009, but the state and county are estimated to net approximately $56 million from its use during 2015-16.