California nursing home residents and workers sounded a "crisis alert" last week to drum up support for a bill that would implement a matching-funds tax for the state to access up to $250 million in federal dollars through Medi-Cal, the state's Medicaid program.
Many nursing homes in California have agreed to pay the tax, and a group called California United for Nursing Home Care, formed last year to fight proposed funding cuts to nursing homes, organized last week's event in which nursing home residents and workers gathered outside their facilities. The group said it hopes to have the bill passed before the legislative session ends Aug. 31.
However, another nursing home group, the California Association of Homes and Services for the Aging, wasn't thrilled about the bill and until about two months ago opposed it, mainly because of the tax. About half of the states have enacted similar taxes or have a plan pending, and battles are being waged across the country.
The issue pits nursing homes with many Medicaid residents against those that have few Medicaid residents. Nursing homes with few Medicaid residents argue the tax is unjust because they won't see much of the reimbursement money yet they will have to bear the additional cost.
Jack Christy, the California association's director of policy, said nursing homes need about half of their residents to be enrolled in Medicaid to recoup what they would pay in the tax. The California bill caps the tax nursing homes would pay at 6% of annual net revenue.
States differ in how they set up the tax formula. An Indiana plan, which has been submitted to the CMS for approval, is based on non-Medicare revenue and calls for county facilities and facilities with more than $9 million in total revenue to pay $2.50 per non-Medicare resident per day, and other facilities to pay $10.45 per non-Medicare resident per day, according to the Indiana Association of Homes and Services for the Aging, a sister group of the California association.
One stipulation in the Indiana proposal and the California bill, which also must be OK'd by the CMS, is that continuing-care retirement communities be exempt from the tax.
"If these exemptions did not get approved, it might very well derail the provider tax in Indiana," said Jim Leich, president and chief executive officer of the Indiana association. "Our association has always been very concerned about the impact of the provider tax on private-pay individuals."
Both the California and Indiana groups said the CMS set a precedent when it recently exempted continuing-care retirement communities in North Carolina and Oregon from paying the tax. North Carolina exemptions were granted in February and Oregon exemptions were granted in May.
Other states haven't been so lucky. Continuing-care retirement communities in Minnesota lobbied for an exemption but haven't gotten one so far, said John Hustad, vice president of public affairs with the Minnesota Health and Housing Alliance, which represents about 700 nursing homes and senior housing communities in the state. Despite the grumblings, the Minnesota tax has been in effect for about 20 years.
Continuing-care retirement communities make up about 100 of the 125 nursing home members of the California association. The association opposed the bill until a provision exempting continuing-care retirement communities from the tax was written into it. Now the group is taking a neutral stance on the bill, officially introduced last week by state Assembly Majority Leader Dario Frommer, because the group acknowledges the need for reform.