When a nursing home in Calais abruptly closed its doors two years ago, the effects reverberated throughout the small Washington County community. Nearly 100 people lost their jobs. Local businesses said goodbye to paying customers. The town suffered the departure of a major taxpayer, which affected everything from sewer rates to real estate prices.

For Martha Baker, the closure meant losing her home. In her mid-90s, Baker was forced to move to a nursing facility in Lubec, an hour away from the staff she had come to consider family, her son and his wife, Town Manager Diane Barnes.

“We weren’t able to go down and see her as often as we wanted to,” Barnes said. “It was hard on her as well with us not being around and the people she was accustomed to taking care of her.”

Baker understood she was moving but not the reason why, Barnes said.

“She said, ‘Why are you taking me away from my home?’ … I can’t explain it, unless you actually go through it, how hard it is on the elderly, especially at that age, to make that type of a transition,” Barnes said.

Some families needed to travel even further, finding placements at nursing homes in Bangor and Ellsworth, she said.

Baker received excellent care in Lubec before she died in November, Barnes said, but the uprooting took a toll on her mother-in-law.

Barnes, who will soon leave Calais to become Lisbon’s town manager, hopes legislation designed to shore up nursing home funding will spare other families and communities from the same fate. The newly passed bill aims to address $30 million in accumulated underpayments to nursing homes under the state’s Medicaid program.

“It’s a little too late for us here in Calais, but I’m hoping that it’s going to help some of the other facilities so we can still maintain access around the state,” said Barnes, who served on a long-term care committee last fall, which proposed added funding for nursing homes. “Especially in the rural communities.”

Maine’s 7,000 nursing home residents are among the neediest in the country. Fifty-six percent are diagnosed with dementia — the second-highest rate in the nation. Maine ranks fourth highest in the number of nursing home residents who need help with tasks of daily living, such as bathing, grooming and eating. Maine nursing homes also must meet some of the most stringent staffing ratios of any state.

Despite the challenges, Maine’s facilities boast one of the lowest rates in the nation of deficiencies, such as mistreating patients or high infection rates, which is a reflection of nursing home quality. Without adequate funding, however, Maine seniors and their families will suffer, experts say.

“Maine nursing homes have for the most part, with some outliers, maintained quality,” said Brenda Gallant, who works on behalf of nursing home residents as the state’s long-term care ombudsman. “And that is critical. But I think we’re at a turning point.”

Funding crunch threatens quality of care

MaineCare, the state’s Medicaid program, foots the bill for nearly 70 percent of Maine’s 7,000 nursing home residents; the national average is 63 percent. At some homes, particularly in poor rural areas, the program covers nearly every resident, stretching bottom lines even further.

Maine is not alone in relying on the health insurance program for low-income Americans to care for its vulnerable seniors. Medicaid has become the single largest payer of long-term nursing home services in the U.S., funding on average 63 percent of all costs. Poor, older states like Maine depend on the program the most.

“In many ways, Medicaid has been the long-term care planning by default,” said Rick Erb, president and CEO of the Maine Health Care Association, a trade group representing Maine nursing homes. “Nothing else has ever been established.”

Medicare covers seniors’ medical needs, but that program pays for only a fraction of nursing home costs.

In Maine, the Medicaid program has underfunded nursing homes for the last several years, reimbursing them based on their costs from 2005. The payment structure hasn’t changed since 2008, except for a 1.5 percent raise in 2012.

Two Maine nursing homes are on the brink of closure, according to Gov. Paul LePage, who has said his administration is searching for discretionary money to help the facilities. Erb declined to identify those nursing homes but said both are located in rural areas. Neither facility has made a formal announcement, he said.

Nursing homes shuttering voluntarily must notify the federal government within 60 days of a closure. Facilities also must notify the state and submit a plan for relocating residents.

According to the Maine Department of Health and Human Services, only one facility closure is officially pending, at Volmer Country Living in Vassalboro. A voice mail seeking comment from Volmer was not returned.

Volmer is an assisted-living facility, not a nursing home, and it is not one of the two facilities Erb referenced, he said.

The new legislation promises to give Maine nursing homes $4 million in additional state Medicaid funds in the fiscal year beginning July 1. Another $5 million is due to follow in the subsequent two years. The federal government would kick in its matching share to the tune of more than $24 million over the next three years.

“If we want to see sufficient staffing, we need to make sure that reimbursement is there,” Gallant said.

She remembers when Maine’s nursing homes lacked enough staff to adequately care for aging residents and the complaints that followed. In the early 1990s, the state tightened up eligibility requirements for nursing homes in an effort to divert less needy individuals toward more affordable settings and in-home care, Gallant said. That policy change left in its wake a sicker nursing home population that placed greater demands on staff, which led to problems, she said.

Advocates fought for and won higher staffing ratios, which directly correlate to the overall quality of nursing home care, she said.

The latest round of nursing home inspections, conducted by the state on behalf of the federal Centers for Medicare and Medicaid Services, turned up 4.5 health deficiencies at Maine facilities, placing the state among the top 10 nationally. Maine also ranks among the top 10 states for its low dollar amount of nursing home fines.

Deficiencies and fines are two closely watched measures of nursing home quality, but many other factors affect residents’ experience, from use of antipsychotic medications to whether routine vaccines are administered.

About 20 percent of Maine nursing homes, or 24 out of 107, rate below average or much below average on Medicare’s Nursing Home Compare website.

While Maine facilities haven’t yet cut back on staffing or quality, Erb agreed with Gallant: “At some point, it certainly will have an impact on quality of care.”

Already, the MaineCare funding crunch is affecting some families in ways they may not realize, he said. Nursing homes underfunded by the state often shift the cost burden to patients with private insurance, Erb said. The daily rate for private insurance averages $260, partly making up for MaineCare’s much lower average of $180 a day.

“People who are paying their own way or have long-term care insurance are paying more than they should have to because they’re subsidizing the state’s Medicaid program,” he said.

Shifting the burden

The new legislation also requires the state to reset reimbursement rates every two years to levels that better reflect the actual cost of nursing homes. Nursing homes where more than 70 percent of residents are covered by MaineCare will receive modest supplemental payments on a sliding scale.

Still, the original funding for the bill was reduced due to the state’s financial constraints, Erb said. Until the Maine Department of Health and Human Services calculates the new payments, nursing homes won’t know whether they will benefit in any meaningful way, he said.

“The supplemental payment won’t be a panacea, but it does ensure that at least some of the funding goes to facilities with a disproportionate MaineCare share,” Erb said.

When Calais’ 52-bed nursing home closed in 2012, many of its residents left the region for good. Oceanview Nursing Home, a small family-owned facility situated 40 miles south in Lubec, took in Diane Barnes’ mother-in-law. But today, 11 of its 39 beds are empty, according to administrator Nathan Brown.

“We’re down under 70 percent occupancy at our nursing facility, for having just lost a quarter of the beds in the county two years ago,” he said.

Many local patients who need treatment for serious illnesses or injuries at larger hospitals in Bangor and Augusta never return, after being referred to nursing homes in those areas following discharge, Brown explained.

Nursing home residents in more urban areas enjoy convenient access to a wider array of specialized medical care. All three of Maine’s largest hospital systems — Eastern Maine Healthcare Systems in Brewer, MaineHealth in Portland, and MaineGeneral Health in Augusta and Waterville — also operate long-term care facilities, with a financial incentive to keep patients within their networks.

Financially speaking, Oceanview, an independent facility owned by Brown’s mother, is performing “horribly,” he said.

Some facilities stay afloat by shifting the burden to residents with more generous private long-term care insurance or Medicare, which pays for some skilled rehabilitation services that must be delivered by a doctor or registered nurse.

But nursing homes located in poorer regions many miles from hospitals that refer Medicare patients can never profit or build a reserve to cover unexpected costs, Brown said.

“It’s a good thing for our industry,” he said. “Places that don’t need a bit of help at all are going to end up getting a lot of money out of this. Places that need more help than anyone else will be given more to continue functioning.”

While the MaineCare funding crisis has left some facilities in dire straits, according to Erb, Gallant points out that nursing homes aren’t the only ones tending to Maine seniors.

“We have funding challenges across the continuum of long-term care,” she said, including services that help seniors live at home as they age.

Still, nursing home residents “are among our most vulnerable citizens,” she said.