COMMENTARY: DSHS is putting budget ahead of care for elderly

I am writing to make sure you are aware of a proposal by the state Department of Social and Health Services (DSHS) for the upcoming 2021-23 biennium state budget which will decimate eligibility and reimbursement for Medicaid residents currently receiving services today in nursing homes, assisted-living communities, adult family homes, and home-based care. By their own published figures, they expect to eliminate eligibility for 12,000 seniors beginning in July 2021

Before I explain what this will likely mean to elderly seniors and our industry, allow me to introduce myself. I am Joe Kilkelly, the CEO of CarePartners Management Group LLC. CPMG is wholly owned by Round Lake LLC (RL) and is the division which provides management services to RL’s portfolio of 16 senior care facilities (operating and under development) with a combined bed capacity of 1,500 residents. RL’s communities provide residential-based living and care services to residents who are independent, require assistance with daily activities or who are suffering from dementia/Alzheimer’s and need a secured and specialized residential setting (memory care). The combined companies employ today approximately 480 employees with a projected total of 760 employees once all communities in development are open and fully operating. Of the residents we currently serve or expect to serve, approximately 38-42 percent are enrolled in the Medicaid COPES program. Four of our operating communities serve low-income residents and have a combined Medicaid occupancy of approximately 84 percent. I have roughly 23 years experience in senior residential care as an owner and CEO.


The following is what DSHS has proposed to do in their projected 2021-23 budget:


DSHS submitted a biennial budget proposal that would decimate facility-based long-term care, leaving thousands without critically necessary services. Under the DSHS proposal, which is the first step in a protracted budgeting process, changes to client eligibility and across-the-board rates reductions would be significant and detrimental to the very settings embroiled in the battle against COVID-19.


Proposed changes to client eligibility standards would eliminate 12,000 individuals from receiving long term care supports and services:

  • The client caseload for SNFs is reduced by 30 percent under the DSHS plan, resulting in a $444 million funding cut for the biennium.
  • The client caseload in assisted living is reduced by 38 percent under the DSHS plan, for a savings of $40.6 million for the biennium.
  • Caseloads for ARC/EARC and specialized dementia care are also reduced by 22 percent because of these eligibility changes, equating to a $32.6 million funding cut for the biennium.

Across-the-board Medicaid rate reduction of 3 percent for all provider types beginning July 1, 2021.  If the eligibility reductions are simultaneously implemented, rate reductions would become 2.4 percent. The anticipated ALTSA rate cuts equate to $145 million over the biennium, of which WHCA members would see the following in reduced funding levels due to rate cuts:

  • SNFs = $38 million total funds.
  • AL/ARC = $8 million total funds.

This is the cruelest proposal I I have ever seen out of a state agency. For our industry (AL), the proposed savings in the state budget will displace thousands of the poor elderly, making them homeless and shortening their lives.


Here is the certain impact of this proposal on our company and the industry in Washington:


  1. Our four high-occupancy Medicaid buildings will immediately close. Most Medicaid residents who qualify for Medicaid fall into the lowest 5 percent eligibility category. They are proposing to reduce it by 38 percent. Our buildings are no different than many others like us, and cutting any eligibility will force a massive number of community closures and will eliminate bed availability for any remaining eligible Medicaid residents.
  2. Our other buildings that serve more private-pay than Medicaid will have to discharge our Medicaid residents, and then we may not be able to survive because being able to serve some Medicaid residents enables us to keep a high enough occupancy to be profitable.
  3. Both the nursing home industry and our industry will contract dramatically and access to care will become very limited, more expensive, and only for the very wealthy.
  4. Many jobs will be lost.
  5. Buildings will default on loans; real estate taxes, excise taxes, employment taxes will decline.
  6. Private capital and lending sources will leave this industry in Washington and it will take a long time to recover any confidence in investing/lending to our Industry, even if conditions improve in the future. This will have long- lasting damage.
  7. Many seniors will suffer; 12,000, the Medicaid estimate, is of course understated because they don’t realize the overall destruction which will occur (closure of Medicaid buildings reducing access for all), and they aren’t projecting the demographic and aging process where we have new entrants to the elderly needing housing and care each and every year, including Medicaid eligible. This 12,000 over 10 years could be 50,000-plus.

To think the state, who closed down our economy at a terrible cost in order to protect seniors and have kept them locked in quarantine ever since (much to their detriment), would now propose to harm these same seniors in this manner is unthinkable and simply evil. And yes, I question the motives of DSHS every day as I witness their behavior versus their words. This proposal will certainly transform lives by creating homelessness, untreated medical conditions and disease, despair, and early death. Then it will destroy the industry, jobs and capital.

We deserve a 20 percent increase in Medicaid reimbursement and no reduction in eligibility. The state will tell you reimbursement rates are adequate. However, in our business, Medicaid rates have fallen dramatically behind the rate of inflation for multiple years. Beginning in 2008-09, Medicaid rates were cut by a total of 7 percent, and then we received no raises whatsoever until a couple of years ago. Yet wages, healthcare insurance, supplies and all our costs rose dramatically. DSHS is not telling the truth about reimbursement rates when they claim they are adequate. Many private studies show they are 20-30 percent lower than a reasonable rate which would produce a reasonable profit margin. Yes, private industry requires some level of profit to stay in business, attract capital and reinvest.

Please help us stop DSHS from hurting the poor elderly who currently receive housing, food service, healthcare and other services from businesses like ours.