KHI News Service

Senate passes nursing home tax

By Dave Ranney | May 08, 2010

The Kansas Senate passed a nursing home provider tax bill late Friday.

The House, which continued work on a budget bill until well after midnight, is expected to vote on the bill later today.

“That’s my hope,” said Rep. Bob Bethell, R-Alden.

The bill uses a tax on licensed nursing home beds to generate about $30 million which, in turn, would be used to draw down $56 million in additional federal Medicaid funding.

The $86 million would be returned to the nursing homes based on the number of Medicaid residents in their care. The more Medicaid residents a home has in its care, the more money it would receive.

Senate Substitute for Substitute for House Bill 2320 passed the Senate on a voice vote. Support appeared to be unanimous.

During the chamber’s 40-minute debate, the bill was amended to make clear the additional aid will be spent on improving resident care rather than padding homes’ bottom line, to prevent homes from raising private-pay residents’ rates to pay for the tax and to exempt the Kansas Soldiers Home in Fort Dodge and the Kansas Veterans Home in Winfield.

The Winfield and Fort Dodge facilities are owned by the state.

“If we don’t exempt them, we’ll have to come up with $400,000 – all from the State General Fund,” said Vicki Schmidt, R-Topeka.

Schmidt, the bill’s Senate sponsor, noted that more than 30 states already use provider taxes to draw down additional federal aid. Each of these states, she said, exempt their state-owned homes for veterans.

Though they would be exempt from the tax, the arrangement allows the veterans homes to receive increased Medicaid payments.

Schmidt noted that if the bill passes the House, the arrangement won’t take effect until approved by the Centers for Medicare and Medicaid Services (CMS).

“We don’t know when that will be – six or nine months, probably,” said Schmidt.

Already, CMS has approved a similar arrangement in Iowa.

The arrangement, Schmidt said, allows nursing homes to receive the increase in federal aid before having to pay the state tax.

All but 20 of the state’s 346 nursing homes are expected to benefit or break even. The average gain: $163,000.

Of the 20 homes that lose, the average loss is expected to be about $42,800.

“There have to winners and losers, that’s one of the CMS requirements,” Schmidt said. “You can’t set it up so that everybody wins.”

An effort to exempt retirement communities failed.

For years, the state’s for-profit homes have supported the tax; nonprofit homes have opposed it.

Gov. Mark Parkinson convened an April 30 meeting with the two sides, after which a compromise began to take shape.

“An incredible amount of work has gone into this bill,” Schmidt said.