Firms sue to stop cuts to assisted-living sites

A group of assisted-living facilities is asking a judge to stop the state from cutting what it pays the facilities and using an assessment tool resulting in hundred of residents being found ineligible for financial help.

In a lawsuit filed Tuesday in Pulaski County Circuit Court, facility owners say the cuts violate a 2001 state law meant to promote the facilities as an alternative to nursing homes, which typically care for residents with more extensive needs.

The Arkansas Assisted Living Act “was very clear and explicit about what the Legislature wanted to happen with assisted living and Medicaid,” Mike Shepard, one of the owners, said.

“Clearly [the state Department of Human Services] in the last three or four years has not only violated the intent of the law, but has put in place things that are going to drive providers out of business.”

The lawsuit was assigned to Circuit Judge Wendell Griffen.

In addition to the facilities, the plaintiffs include the Assisted Living Council of Arkansas, which was formed last year and represents about a dozen facilities, and 10 people identified only as “John Doe” found to be ineligible for financial help as a result of the assessment tool.

Human Services Department officials have acknowledged the tool resulted in a large number of Arkansans being found ineligible for help paying for care in an assisted-living facility since the state began using it in January.

Based on a tool developed in Minnesota, the Arkansas Independent Assessment classifies people based on their need for help with daily living tasks, such as dressing and bathing.

Nurses with Optum Government Solutions, a division of Minnetonka, Minn.-based United Health Group, do the assessments to determine eligibility for the assisted-living program and other programs under a contract with the state.

The contract’s most recent extension calls for Optum to be paid up to about $16.4 million from Sept. 1 through June 30 of next year.

Previously, Human Services nurses did assessments using a different tool, known as the ArPath.

The department announced in June it would review the assessments done with the new tool resulting in Medicaid recipients or applicants being found ineligible for assistance.

The Legislative Council’s Review Subcommittee last month also directed Human Services for monthly reports on steps taken to improve the assessments.

The rate cut stemmed from an actuarial study by Seattle-based Milliman. Initially the Human Services Department planned to cut the rates by 22 percent.

In response to complaints from facility owners, the department agreed to have Milliman do a new study. That resulted in a plan to reduce the rates by 14.7 percent.

The cut is being phased in through 2021 and will reduce what the Medicaid program pays the facilities to $68 per resident per day.

The Human Services Department hadn’t responded by Tuesday evening to a requests for a comment on the lawsuit.