By Mike Shields, KHI News Service, February 25, 2010
TOPEKA — An idea that has bounced around the Legislature for a few years without getting traction is now gaining new support thanks to the state's budget problems.
Committees in the Senate and House each took testimony Thursday on bills that would levy a new "assessment" or bed tax on nursing homes in a move to draw down more federal Medicaid dollars that the state would then funnel back to the nursing home industry.
The Senate Ways and Means committee heard about Senate Bill 546 and the House Long-Term Care Committee heard testimony on House Bill 2673 both of which would empower the Kansas Health Policy Authority to determine how much the tax or assessment per bed would be.
Some supporters of the measure say the tax should be set high enough to offset the recent 10 percent cut in Medicaid reimbursements ordered by the governor effective Jan. 1 to help keep the state budget in balance.
A report received by the Kansas Health Policy Authority in January found that $725 per bed tax would generate about $16 million, not counting a net $24 million increase in Medicaid dollars. That would mean an average $57,408 more in Medicaid payments for 314 of the state's nursing homes and an average loss of $22,669 to 28 facilities.
The idea of a bed tax, similar to one already in place for Kansas hospitals, has divided the nursing home industry to an extent that legislators shied from passing one in earlier years despite pleas from the for-profit wing of the industry.
Non-profit nursing homes were generally opposed to the tax saying it would force higher rates on their private-pay residents. For-profit facilities tend to have a higher percentage of residents whose services are paid for by Medicaid.
But given the recent Medicaid cuts and the report showing more would gain than lose, many non-profit facilities are now warming to a bed tax.
"Historically, our organization has opposed the provider assessment approach...however, today's reality changes that," Monte Coffman, executive director of Health Management of Kansas, Inc. in Coffeyville, told the House committee.
Rep. Bob Bethell, R-Alden, the committee's chairman also was opposed in the past to the bed tax. But now he's among those pushing hardest for it. He said the Legislature is showing no enthusiasm for other types of tax increases and something must be done to reverse the Medicaid cuts.
"I've been asking for at least three months for other solutions to this," Bethell said at one point, responding to a bill opponent. "I don't see them. I would welcome solutions."
Later, talking to KHI News Service, Bethell said using a bed tax to restore the Medicaid cuts would have the collateral benefit of getting back matching federal dollars lost when the state shaved its share of Medicaid spending. For the six months between Jan. 1 and the end of the current fiscal year, June 30, the state will lose an estimated $75 million in federal aid.
"That's what's being talked about here," Bethell said. "About $75 million in federal funds that one of 36 other states (that already have a bed tax) will be glad to have."
The bills have drawn opposition from Americans for Prosperity - Kansas, an anti-tax group, various facilities and organizations that would lose money from the tax and also the Kansas Association of Homes and Services for the Aging, which represents 160 not-for-profit nursing homes and community service providers.
One facility that would be hurt is Brewster Place in Topeka, which allows residents to buy in to its assisted living facilities with the promise that they will receive long-term care when or if they need it.
"This tax would be passed on to frail nursing home residents who pay for their own care," said Brewster Place chief executive David Beck. "It is an especially egregious tax in the case of Brewster Place and other continuing care nursing homes that work diligently with our residents to preserve health and lessen the likelihood of Medicaid dependency."
The Senate committee scheduled to continue hearings on SB 546 on Friday. The House committee is scheduled to continue its informational briefing on HB 2673 next week.