By TRACEY DRURY
tdrury@bizjournals.com | 716-541-1609

More than a dozen area nursing homes have joined a lawsuit aimed at claiming funds owed by the state for increased Medicaid reimbursement rates.

Statewide, about 100 nursing homes joined the suit, which was  filed March 21 in state Supreme Court against Dr. Nirav Shah, commissioner of the New York State Health Department, and Robert Megna, director of the state Budget Office. The legal action seeks to enforce a 2006 law designed to bring Medicaid reimbursement rates into the 21st century.

Nursing facilities statewide are currently receiving reimbursement dollars based on 1983 rates. The Reimbursement Reform Act of 2006 brought those rates up to 2002 levels and was scheduled to go into effect in 2009. Though the federal government approved the change, the rates have not yet been adjusted.

More than 70 homes in the Buffalo-Rochester area have joined the action, including private, public, for-profit and nonprofit agencies locally: Elderwood Health Care, Absolut Care, Beechwood Homes, McGuire Group facilities, Catholic Health System sites including McCauley Residence and St. Francis of Williamsville, and the Rosa Coplon Jewish Home & Infirmary, part of the Weinberg Campus.

Robert Meiss, CEO of Beechwood Homes, says his facilities are owed more than $1 million for the two years it has not received the full reimbursement rates owed. The shortfall has halted several capital projects, including a conversion to a person-centered care model, he says.

"When you run as tight a margin as we do, not having those kinds of funds that they're legally obligated to pay us has really prevented us from moving ahead with any of our strategic plans," he says. "We don't have the resources necessary to pay for it."

Others struggling to deal with the loss in funds include Elderwood, which operates 10 skilled-nursing facilities, six assisted-living sites and two independent-living communities in Upstate, many of which are affected.

"This was a rebasing that was supposed to take place starting in 2009 and get us rates more closely aligned to 2002," says Barbara Tschamler, marketing director. "In 2009, with all the state budget issues, the Legislature took that rebasing away. So we are still being reimbursed rates for Medicaid at 1983 rates."

Thomas Smith, a partner in the Rochester law firm of Harter Secrest and Emery LLP, says the old cost data is simply stale and outdated and don't come close to reflect the necessary costs of operating a nursing home in 2011.

"The state Legislature specifically ordered the Department of Health to fix this irrational formula, but the department has refused to do so. Our clients' only recourse is to seek judicial relief," he says.

None of these homes seek to profit from the Medicaid system, he says, but instead receive what has already been promised.

"The money required to implement the rebasing law has already been appropriated - it has just been held in abeyance for reasons that are unclear to us," Smith says. "We're suing essentially to free up the money that's already been appropriated to go to our nursing facilities to allow them to better meet their costs of operation."

Although there have been some efforts under way to resolve the dispute, the litigation seeks relief from the courts in the event the state does not follow through, Smith says.

The suit was filed in state Supreme Court in Monroe County and will be heard in oral arguments May 3.