On Thursday, March 10th Care Providers of Minnesota Board member Jim Birchem, together with our Long-Term Care Imperative partners, gave testimony in the House Health and Human Services Finance Committee in support of Representative Rod Hamilton’s bill to remove rate equalization in nursing homes.

In his testimony, Mr. Birchem outlined several reasons to remove this policy. He pointed out that since the elimination of cost-based reimbursement in the 1990s, the state has allowed a significant gap to develop between the average Medicaid rate and the cost of care. At this point, the Medicaid rates, which apply to private pay residents due to equalization, do not cover anywhere close to the actual cost of care. Currently the average Medicaid reimbursement rate for nursing care falls below the average cost of care by almost $25 per resident per day.

Secondly, Mr. Birchem pointed out that there are protections against huge increases to private pay individuals in one of the current legislative proposals calling for a phase-out of rate equalization. In this proposal, differentials charged to private pay residents would be up to 2%, 4%, and 6% for each of the next three years. In the fourth year, rate equalization would be fully repealed, and charges would then be based on what consumers are willing to pay for the services offered by each nursing home throughout the state. Charges are likely to be constrained in many cases because of variation in local market conditions, and because providers will want to attract customers with a competitive price.

Finally, Mr. Birchem pointed out that, within the nursing facility environment, federal law currently prohibits discrimination in admissions, transfer and discharge based on payer source.

At the conclusion of the hearing, the bill was laid over for possible inclusion in the health and human services budget omnibus bill. We will keep you informed of future efforts on this issue.

Toby Pearson
952.851.2480
tpearson@careproviders.org

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