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Under a new proposal the Indiana Family and Social Services Administration plans to pursue in 2009, nursing homes scoring higher on their State and Federal inspections would be rewarded with higher Medicaid payments while those that don’t could suffer cuts. The Indiana FSSA disputes that this is just a cost-saving measure noting that they would have pushed for this proposal regardless of the economic condition. To effect the plan, however, the FSSA must have the policy established through a rule-making process that requires a public hearing and economic evaluations. That will likely take about six months. Despite this, the discussion could be usurped by lawmakers, who are expected to have several bills dealing with nursing home reimbursements and inspections when they return to the Statehouse later this month.

Proposed changes face objection by the Indiana Health Care Association

The Indiana Health Care Association is a group that, among other things, serves as a lobbying mechanism for Indiana nursing homes. The Association has cited a number of objections and proposed changes to the FSSA proposal. Local media reported the association’s president, Stephen Smith, as saying “[w]e completely agree with the intent [of the FSSA proposal]“. “But we think there’s more discussion to be had about the actual approach.” The proposal is part of a larger plan by FSSA to adjust to weakening state revenue and put more recipients into plans that manage health costs so that more spending is matched by Federal dollars.

The FSSA is also looking to change the way most recipients receive prescription drugs. Currently, they are provided through the insurance companies that operate the managed care plans and paid for by the state. With the new approach, FSSA will take over buying and distributing drugs, thereby creating savings of as much as $40 million annually, as Federal law gives states big discounts for such purchases. Additionally, the FSSA will pursue a rule that allows it to pay doctors, dentists and other health-care providers 5 percent less than the current rates. This plan, however, is only intended to be enacted if the state appears to be headed to a deficit and the fiscal situation worsened.


Approximately 40,000 individuals live in Indiana nursing homes, and nearly half of them are recipients of Medicaid. Currently, base Medicaid rates are set by complicated formulas that take into account how much the nursing homes spend on specific areas (such as administration and staffing), and include specialized “add-on” services for such units as people with Alzheimer’s disease.

The FSSA’s plan would boost the add-ons for higher-need/risk patients and decrease the rates for those who could be served by community-based services, such as assisted living and in-home care. It would also increase the rates for nursing homes that receive the highest scores under the new CMS / Department of Health report cards. These evaluations are based on inspections that occur annually or immediately following specific complaints. Nursing homes that do poorly on inspections would get lower rates. The FSSA’s outgoing president was reported as saying that the FSSA was not going to pay a premium for quality of care if the care facilities were providing was not “actually quality”.

The Indiana Health Care Association, through its president, Stephens, said the proposal is based on an inspection and assessment system that is “broken, entirely subjective, and lacks a consistent quality of assurance mechanism.”

The Association intends to back a number of changes to the inspection process. Lawmakers intend to take a look at the association’s suggestions, but Terry Whitson, assistant commissioner for health-care regulatory services at the Indiana Department of Health, said investigators must follow federal guidelines — not a state system — when inspecting nursing homes.

Quoting local media reports, Whitson was heard saying, “[w]e have over 100 nurses performing these surveys and not every one is going to have the same mind-set all the time. There are bound to be some inconsistencies. But all our surveyors go through federal training. Every survey is reviewed by the [Federal] Centers for Medicare and Medicaid Services. There is a level of consistency and fairness.”
Nursing homes vary in the quality of care and services they provide to their residents. Reviewing health inspection results, staffing data, and quality measure data are three important ways to measure nursing home quality. This information gives you a “snap shot” of the care individual nursing homes give.

One of the most important things to do is to visit the nursing homes you are considering. If possible, also contact your Long-Term Care Ombudsman or State Survey Agency before making a decision. Take a copy of the Nursing Home Checklist when you visit a nursing home and talk to the nursing home staff about the information on this website.


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