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2019 Connecticut Legislative Session:
The Impact on Nursing Facilities  

The Connecticut legislative session was completed on June 5, 2019 and included several items that will impact the financial operations of your facility.

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The Connecticut legislative session was completed on June 5, 2019 and included several items that will impact the financial operations of your facility.

The Connecticut legislative session was completed on June 5, 2019 and included several items that will impact the financial operations of your facility. The first item was a wage enhancement program for skilled nursing facilities. This program includes Medicaid rate increases as follows: 

  • 2% on July 1, 2019 
  • 1% on October 1, 2020 
  • 1% on January 1, 2021 

On Friday June 28, the Department of Social Services provided guidance and responses to Frequently Asked Questions regarding that program. The links below will bring you to that information.  

It is the intention of The Office of Policy and Management (OPM) and The Department of Social Services (DSS) that this program will resemble the November 2018 wage enhancement program and result in a corresponding increase in wages and benefits to employees (as defined in the Guidance) consistent to the facility rate increases noted above. It appears that wage and benefit increases given on or before September 30, 2019 (or on/before October 1, 2020 and January 1, 2021 for the later increases) will meet the program spending requirements related to each individual facility rate increase. If a facility has provided the required salary and benefit increases and has excess funds from the facility rate increase, the facility will be able to use those excess funds to cover other allowable cost increases. The intent is for this program (as well as the November 2018 program) to be analyzed in the desk review process by DSS and its external auditors Myers and Stauffer through the annual cost report filings. 

It appears that certain industry factors as well as other legislation from the session will result, in most cases, in the majority of this money being needed by facilities for wage increases. 

Legislation requiring increases to the minimum wage laws was passed, which will lead to an eventual minimum wage of $15 per hour.  

  • The first increase will occur on October 1, 2019 to 11 dollars per hour.  
  • The second increase will occur on September 1, 2020 to 12 dollars per hour.  
  • The third increase will occur on August 1,2021 to increase to 13 dollars per hour.  
  • The fourth increase will occur on July 1, 2022 to 14 dollars per hour.
  • The final increase is scheduled for July 1, 2023 to reach the 15 dollars per hour.  

The minimum wage increases will dictate wage increases for a portion of the period of the Medicaid rate increase approved. There is currently no guarantee or commitment by the State for additional rate assistance to skilled nursing facilities for the final three increases of the minimum wage requirements. In addition, facilities will need to consider and address wage compression due to the impact of the minimum wage increase.  

We suggest that facilities calculate the impact of these rate increases based on anticipated Medicaid days through the period of the minimum wage increase. Then, determine the cost of increasing wages up to the minimum for employees not at that level, the wage structure compression factor, and any other anticipated salary increase over the same period. This will give you an idea over the next four years where this legislation will put your facility financially.  

In addition to this rate change, legislation indicates that skilled nursing homes will have their Medicaid rates re-based on the September 30, 2018 cost reports. This means the costs and days or imputed days from that cost report will be used. This re-basing contains downside risk only. Each facility’s newly re-based calculated rate will be compared to its paid rate prior to the November wage enhancement increase. If your newly calculated rate is higher than the paid rate, your rate will not change. If your newly calculated rate is lower than the paid rate, your rate will be reduced by the difference between the calculated and paid rate up to 2%, unless your facility has an occupancy of less than 70% for the year-end September 30, 2018 or is a onestar facility. If you meet either of those criteria and your newly calculated rate is below your paid rate, your paid rate will go down to the calculated rate without any stop loss included. Once this rebasing is completed, it is anticipated that your November and July wage enhancement increases will be included in your July 1, 2019 rate. 

Finally, from a rate perspective, DSS has the ability to include reimbursement for fair rental additions included in the September 30, 2018 cost report. 

The implementation of this legislation is still a moving target and will likely change over the next few months. If you have any questions, please reach out to George Thomas gthomas@blumshapiro.com or 860.561.6853. 

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