Some nursing homes call for fee to offset Medicaid cuts

TOPEKA — Levying an annual fee on every licensed bed in Kansas nursing homes could help offset cuts in Medicaid payments for nursing homes, some in the industry say.

But others say the additional assessment will turn into a tax on seniors who are paying for their own care, and could eventually raise rates.

"There will be some pressure to pass that on to the private-pay residents," said Debra Zehr, president and CEO of Kansas Association of Homes and Services for the Aging.

Senate Bill 546 would levy an annual fee of $1,325 on every licensed bed in nursing homes. That money — an estimated $30 million initially — would be placed in a fund and used to draw an estimated $57 million more in federal matching dollars for Medicaid.

Thirty-seven other states have similar assessments.

The idea is a way to bring more money into the system without raising taxes, said Kevin Unrein, the administrator owner for LakePoint Nursing Centers, which operate in El Dorado, Augusta, Wichita and Rose Hill.

While expenses such as food, salaries, property taxes and unemployment and health insurance have increased, the amount the state pays for Medicaid patients has not, he said. The state decreased rate payments by 10 percent starting Jan. 1.

That has left some facilities — such as LakePoint El Dorado, where about 70 percent of the residents pay through Medicaid — struggling.

"I look at all the lesser of the evils and this is one way that Kansas can do what they are required to do legally in covering Medicaid costs for residents in Kansas," Unrein said.

Fee or tax?

All nursing homes would be required to pay the $1,325 per-bed fee.

But the additional money would only go to nursing homes that care for people paying with Medicaid, the state-run low-income health care coverage program which is paid for by state and federal dollars. They could receive what they pay in and more.

Nursing homes that accept only private-pay residents or payments from Medicare —federal health insurance for the elderly — would pay the fee but not receive money back.

"Some will get less back than what they paid in the tax — far less," Zehr said.

Opponents argue the assessment equals a tax on seniors who have saved for retirement and are paying their own way. They've dubbed the idea a bed tax, or the more unfavorable moniker of "granny tax."

"Our private-pay residents are not rich residents. They are people that scrimped and saved their whole lives," said Shawn Sullivan, executive director of the Kansas Masonic Home, a nonprofit long-term-care facility in Wichita.

Raising rates on private-pay residents is the only place Sullivan said he could find additional money if he has to pay the bed assessment.

Although the Kansas Masonic Home, where about 60 percent of the residents pay through Medicaid, would benefit from the fee based on some numbers circulating around the Statehouse, Sullivan worried the funding would not fully materialize.

Estimates show Sullivan's site would pay $159,000 and get back $324,000. But that assumes all of the money from the bed assessments goes to nursing homes, he said.

"My greatest fear is that in future years, or even right away, that the money raised by this would be diverted to other purposes," Sullivan said.

The measure was sent back to the Senate Ways and Means Committee shortly before lawmakers adjourned this month, but it could return for debate during the veto session, which starts April 28.


Residents at the Kansas Masonic Home have been writing letters to their legislators, urging them to not pass the measure.

"The Kansas Masonic Home will have to increase the rates if the tax is imposed and the home has already lost quite a bit of income because of the decrease in Medicaid payments. It is an added insult to older people," said Venus Kusnerus, 87. She wrote her own letter and volunteered to write letters for her friends.

Romano Castillo, 86, also doesn't like the proposal.

"I can't see paying tax on a bed," she said. "I retired from the federal civil service and my son sold my house. Like he told me the last time I talked with him, the money is going faster than I can afford. I may be living out in the cold."


Supporters of the proposal say that private-pay residents will be asked to pay more anyway to help offset the cuts in Medicaid payments.

"Some facilities will choose to pass something along to their residents that are private pay, but they are going to anyway," said Cindy Luxem, CEO of the Kansas Health Care Association. "It's already happening that private pay residents are footing the bill for everybody that is not adequately funded in the facilities."

The association represents for-profit and nonprofit facilities throughout the state and has pushed for the bed assessment for several years, she said.

Luxem said that without additional revenue to offset the Medicaid rate cuts, facilities with a majority of Medicaid patients — particularly ones in western Kansas — would start shutting down.

"Sometimes, in dire situations, you have to make tough decisions and figure out how to get money back to providers," she said.

Luxem doesn't worry about the money being diverted from nursing homes. A similar assessment on hospital beds has not been diverted; and the proposed legislation stipulates the money can be used only for nursing home Medicaid payments, she said.

Any additional money generated by the fees would pay to enhance the quality of care in nursing homes. That program would be overseen by a nine-member panel that includes a representative from Luxem's association.

Mitzi McFatrich, executive director of Kansas Advocates for Better Care, which also would be represented on the panel, said her consumer advocacy group has not take a position on the idea of a bed assessment.

She said she wanted to make sure the money truly helps improve the quality of care.

"If we are going to look at this, I want it to benefit the people that are going to pay for it," she said.