Medicaid changes to curb costs, possible fraud create financial crisis for foster homes

A Nevada Medicaid regulation change to curb costs and reduce abuses in the system, which state officials acknowledged may include fraud, is now creating financial hardship for Clark County foster home providers, forcing at least one to lay off 12 employees.

“We are drowning,” Dave Doyle, Eagle Quest director of operations, said in a meeting with county officials and staff last week. Eagle Quest operates nearly 50 foster homes throughout Clark and Nye counties and is the agency that had to resort to layoffs.

The change that went into effect on Jan. 10 affects all Medicaid recipients who need basic skills training, said Elizabeth Aiello, deputy administrator for the Nevada Division of Health Care Financing and Policy, which made the Medicaid change.

Basic skills training helps those who have mental, physical or behavioral impairments attain more functionality in society, according to Nevada’s Medicaid office.

The change was made by the state “because of rampant abuse,” said Barbara Buckley, executive director at the Legal Aid Center of Southern Nevada and a former Nevada lawmaker.

Under the state’s changes to Medicaid eligibility, services for those recommended for basic skills training are contingent on review and authorization that shows a medical necessity, Aiello said. The most training recipients can get is two hours a day, unless more is approved.

Before the change took effect on Jan. 10, those in need of basic skills training had to submit a request for two or more daily hours, which automatically would be approved, Aiello said.

But over the past couple of years, the cost for those services, which include anger management and communication skills, has skyrocketed.

State officials last year began to question whether all recipients need the training, Aiello said. Another concern was that “Medicaid has been, maybe, supplementing (the operation of) foster homes.”

In November, during public workshops about the change, it was discussed that foster care providers “would have trouble making ends meet.” But Medicaid funding should only be used to pay for what is medically necessary, Aiello said.

The state’s Medicaid program saw a 64 percent increase in fiscal 2013 over fiscal 2012 for basic skills training for youth and adults. In fiscal 2013, the cost for basic skills training was $71.8 million, with youth accounting for $45.1 million of the expenditure. That’s an overall increase from $43.7 million in fiscal 2012, when youth accounted for $30.5 million.

In fiscal year 2006, the program cost was only $6.3 million.

A little more than half of the funding for the program comes from the federal government, Aiello said.

“It’s been a giant increase,” she said. “There probably was some fraud and abuse in the system,” but she also attributed part of the problem to new providers who lacked an understanding of the rules of the program.

There are 3,991 providers who receive Medicaid reimbursements for providing basic skills training, said Mary Woods, spokeswoman for the Nevada Department of Health and Human Services.

The reimbursement rate is $9.09 for every 15 minutes, or $72.72 for two daily hours of basic skills training per recipient.

Buckley’s agency saw abuse in the system with many children, she said, and many children receiving those basic skills services don’t need them. But providers make money through the services.

“We are glad that actions are being taken to curb abuse,” she said last week. “Children shouldn’t be used for profit.”

But the state Medicaid reimbursement changes have had a negative impact on foster care providers that operate therapeutic homes for children that require a higher level of services.

As a result of the Medicaid change, Eagle Quest has experienced on average a 52 percent reduction in basic skills funding, according to Doyle, who said the cost of caring for some children now exceeds what the county and state are paying. Since 2008, basic skills training has been one of the primary funding sources for specialized foster care.

“The reductions that we have experienced, thus far, range anywhere from 34 percent all the way to 100 percent on two clients,” he said. “The aforementioned reductions in funding have made daily operations challenging, to say the least, and thus the multiple layoffs.”

Kerri Korin, Nevada manager for KidsPeace, based in Schnecksville, Pa., said the office in Las Vegas has about 30 foster children in care. About half of them have had their services cut by half.

“We are seeing most agencies being impacted,” she said.

The Clark County Department of Family Services on average serves more than 330 children who are placed in therapeutic foster homes, said Lisa Ruiz-Lee, director of the agency.

Her agency reimburses $40.55 for the daily rate of children up to age 12 for room and board costs and $43.52 for teens 13 and up. That’s in addition to the $72.72 in Medicaid funding paid by the state for two hours of daily basic skills training.

Family Services pays between $6 million and $7 million a year for the placement expenses associated with therapeutic foster care, Ruiz-Lee said. Family Services contracts with 22 agencies that provide therapeutic foster care.

The Clark County Department of Juvenile Justice has about 66 youths placed in therapeutic homes, said John “Jack” Martin, director of the county’s department of juvenile justice. The agency’s daily reimbursement rate for room and board is $43.52.

That comes out to about $1.5 million a year, Martin said.

“That is the one-million-dollar question,” he said when asked what would his department do if juveniles in therapeutic foster homes have to return to his agency.

Officials would have to take various things into consideration, such as the risk to the community they may pose, and look at their original charges, Martin said. Some youth could return to detention and some could possibly return home with wraparound services.

Eagle Quest provides services for about 60 youths in the county’s Department of Juvenile Justice Services and for about 80 from Family Services, Doyle said.

Eagle Quest has 30 children affected by the reduction in funding, but had not revoked their placements as of Tuesday.

Reporter Yesenia Amaro can be reached at yamaro@@reviewjouranl.com or 702-383-0440.