KHI News Service

Uncertainty prevails on nursing home tax

Another question to settle during the veto session

By Dave Ranney | April 28, 2010

In Kansas, no one opposes the proposed tax on licensed nursing home beds more than Jamie Frazier.

“It ought to be called a granny tax because that’s what it is,” he said.

Frazier runs Lake View Village in Lenexa, the largest retirement community in the state. He says the proposed tax would cost his facility almost $200,000.

To come up with the money, he said, the facility would have to raise the monthly fees its residents pay.

“Essentially, this would be taxing private-pay residents to pay for Medicaid residents when, instead, we ought to be looking at a broader based tax,” Frazier said. “Medicaid was put in place, philosophically, to care for children and the elderly. It’s a societal obligation that should not come down to one group of nursing homes paying for another.”

Senate Substitute for Substitute House Bill 2320 calls for using a $1,325-per-year 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.

Ninety-nine percent of the $86 million would be returned to the nursing homes, depending on how many of their residents are on Medicaid. Homes with more Medicaid residents would get more money.

Because Lake View Village has few Medicaid residents, it would pay more than it would get back.

Legislators return to crowds but no certain budget plan

The bill’s supporters – a group led by Rep. Bob Bethell, R-Alden - have been quick in pointing out that more than 90 percent of the state’s nursing homes will either break even or come out ahead.

It makes little sense, they say, to leave $56 million on the federal table at a time when many nursing homes, especially those with high numbers of Medicaid residents, are reeling from the 10 percent cut in Medicaid reimbursement earlier this year.

“I’m still optimistic we can get something passed,” Bethell said Tuesday. “We’re in a situation now where (legislators) are waiting to see what else in coming down the pike on this issue. It’s only a matter of time, I think, before they come to realize there isn’t anything coming down the pike. If we’re going to do anything, this is it.”

Bethell said he’s irked by Lake View Village’s campaign against the bill.

“They’re a nonprofit facility that’s assessed at $78 million, that doesn’t pay property tax, that takes very few Medicaid residents – and they’re saying they shouldn’t be taxed,” he said. “That doesn’t seem right to me.”

Medicare and Medicaid regulations do not allow the state to exempt retirement communities such as Lake View Village from a provider tax.

“There have to be winners and losers,” said Barb Conant, a spokeswoman for the Kansas Department on Aging. “Those are the rules.”

The bill’s supporters and opponents have spent the past three weeks lobbying legislators.

“We’ve sent a lot of letters to a lot of legislators,” said Cindy Luxem, executive director of the Kansas Health Care Association, which represents most of the state’s for-profit nursing homes. The association supports the tax.

The association representing the state’s non-profit homes, Kansas Association of Homes and Services for the Aging, opposes the bill.

Sen. Ralph Ostmeyer, R-Grinnell, has 22 nursing homes in his 18-county district.

“I’m kind of surprised,” Ostmeyer said. “I sent letters to all 22 homes in my district, looking for input. I got responses back from about a third of them. I thought I’d get more than that.’

The responses, he said, were mixed: “It depended on whether they were for-profit or not-for-profit.”

Ostmeyer said he’s uncomfortable with the bill taxing nursing home beds that are vacant.

“Somebody has to pay the tax,” he said. “When there’s an empty bed, I suspect the others will end up paying it. That’s a problem because a lot of the homes in my district are small and have vacancies.”

Kathy Ross runs Solomon Valley Manor, the 36-bed nursing home in Stockton.

“We’re 64 percent occupied,” she said. “We’re a small, rural nursing home where hometown folks take care of hometown folks. This is about families taking care of families.”

Solomon Valley Manor is owned by the City of Stockton, its finances, Ross said, are in the black.

“But with the 10 percent cut in Medicaid, we’ve had to make some reductions in hours and labor that should not be long-term. They need to be addressed,” she said. “This bill would do that.”

Ross said she’d written Ostmeyer, encouraging him to vote for the tax.

“I feel the fee – the way it’s spelled out in the bill – is equitable,” she said. “I’ve also told him I support the 1-cent sales tax,” increase proposed by the governor.

KDoA projections show Solomon Valley Manor would pay in $45,050 and get back $103,388.