Supportive Living Facilities in Crisis from Frozen Medicaid Payments

Supportive living facilities (SLFs), Illinois’ affordable assisted living program, is in danger of needing life support since the state hasn’t paid out regular Medicaid reimbursements since July 2011, according to several local operators.

Like many other states across the nation, Illinois is facing a budget crisis that is deeply impacting SLFs as they struggle to remain operating despite inadequate funds, especially those who don’t qualify for expedited payments.

For most facilities, the number of residents whose care is funded through Medicaid far outnumbers the “private pay” residents, and it’s these facilities that are being hit the hardest.


“Places will have to shut down if payments don’t come soon,” says Nancy Kapp, president of the Renaissance Company, which owns and operates the 107-unit St. Luke Renaissance at Greenview Place in Chicago. “You can’t go on like this.”

Some state providers had gotten word that they would receive a payment before Christmas, a promise that many were depending on with payments currently more than 150 days behind. However, none of the non-expedited SLFs got paid for July services before Christmas, according to Wayne Smallwood, executive director of the Affordable Assisted Living Coalition.

While Kapp says her facility is not in imminent danger of shutting down in the next month or so, she says it could face closure in the next couple of months if it still hasn’t received payment.


Across the state, about 16 facilities have been able to get on an expedited payment program, says Bob Schleicher, managing member of St. Francis Woods LLC, which operates a 92-bed SLF in Peoria, Ill. In order to be eligible, their Medicaid population must be at 80% or more, and their asset-to-liability ratio at 1.1, he says, and while only 16 were in the program the last time he checked, there are a “whole lot more facilities that are on the periphery of those numbers.”

Unfortunately for St. Luke Renaissance at Greenview Place, even though its resident mix is more than 80% Medicaid, its capital reserves barred it from eligibility for the expedited payment program, says Kapp, and according to Schleicher, the state is trying to change the requirements of the program that would further disqualify other facilities by changing the asset-to-liability ration to 1.5.

On a day-to-day basis, many of the state’s 133 operating facilities are struggling to continue business as usual.

“They’re having a hard time finding money to pay vendors and staff; they’re using lines of credit or reserves, but that’s rapidly coming to an end,” says Smallwood.

The lack of reimbursement could cause some to go out of business, and the facilities that operate only one or two units are most at risk, he says. About half of the facilities are smaller operations with one or two buildings, while the other half are generally owned by those who operate five or more facilities.

“The small ones feel the impact quicker,” says Schleicher. “We don’t have as large of reserves, or as large of a capital bank.”

And even the big ones are feeling a pinch. “You can only move money within your large organization so much before you’re handicapped,” he says.

“It all hinges on what the governor and the assembly do to solve the state budget problem,” Smallwood says, adding that Illinois has the “highest per capita deficit.”

The situation isn’t looking good, and Schleicher and fellow managing agent for St. Francis Woods LLC Nancy Lee-McQuillan say there isn’t a clearcut solution.

“Without the state doing what they agreed to do, which is pay us on a monthly basis, we can’t operate a facility,” says Lee-McQuillan.

“We can’t seem to get an answer of how this can get fixed,” Schleicher added.

A recent state Medicaid study conducted by Eljay, LLC on behalf of the American Health Care Association (AHCA) predicts that the shortfall in Medicaid funding for seniors’ long term care needs will reach $6.3 billion in 2011.

“Limited state resources, sagging state economies and continued rebalancing efforts are reflected in that at least 60% of states that have either reduced Medicaid rates or provided no Medicaid rate increases for FY 2012,” said Joseph Lubarsky, president of Eljay, LLC and author of the report, in a statement.

Many senior care providers are working to change regulations that allow Illinois under Section 25 of its State Finance Act to delay Medicaid funding, with some starting a petition to eliminate the section’s provisions and require funding in the annual budget.

The Illinois Department of Healthcare and Family Services did not provide a comment on the situation as of press time.

Written by Alyssa Gerace