Care Centers Avoid Rate Cuts in Legislative Special Session

Posted on May 29, 2019 by Jeff Bostic

The outcome of the short legislative special session last week turned out to be much more positive for care centers than we had feared for the last few months. The proposed cuts in operating rates, which were in the Governor’s budget proposal and the House budget bill, were dropped from the final Health and Human Services (HHS) budget bill due to objections by the Senate.  

Value-Based Reimbursement

The preservation of more than $60 million in funding over the next four years leaves care centers much better positioned to continue to address workforce challenges and other cost pressures. The proposed changes to the care-related payment limit and the proposed cap on the other operating price were recommended in a report commissioned by the Minnesota Department of Human Services (DHS) and were intended to slow down the cost growth that has occurred since Value-Based Reimbursement (VBR) was implemented, as well as create a stronger incentive to improve quality in order to receive full funding of care related costs. Key people at DHS, including the new commissioner, remain concerned about cost growth and incentives for quality improvement, so the possibility exists that these issues will continue to be a subject of legislative attention in future years.

Property Payment Reform

Another positive outcome of the final budget bill was a compromise between the Long-Term Care Imperative and DHS on movement toward a new property payment system for care centers.

The agreement applies a new property rate formula to future moratorium exceptions projects and includes $1.25 million in additional funding for projects. The new formula includes a 7.5% rental rate, much higher per bed investment limits, and no penalties for developing single rooms and accessing low interest rate financing. This is a dramatic improvement over the current system and should provide a strong incentive to make investments in new and improved facilities. The agreement includes a transition of relocation and consolidation projects to the new property rate formula from the existing process. It also drops the DHS proposal to move all care centers to a new system while phasing out closure incentives.

The Long-Term Care Imperative and DHS would both like to see all care centers on a system where property rates are determined by a more rational system than the existing one, so work on figuring out a way to accomplish that will continue in the interim.

To read the legislation for property rate reform, click here and go to Article 4. 

Swing Beds

One disappointment of the final HHS budget bill was the outcome on swing beds. The bill allows a significant expansion in the use of swing beds starting in 2020 and continuing in subsequent years. The specifics include an expansion of the limit on swing bed use from the current 2,000 days to 3,000 days in 2020 that is followed by increases in the limit of 200 days per year until the limit reaches 4,500. In addition, charity care days and days of service to patients who are denied admission by all care centers within 25 miles do not count toward the limit. 

The Long-Term Care Imperative will work with our care center members to track the impact of the expansion of swing bed use to determine whether it is resulting in Medicare recipients being diverted to more expensive settings that are further from their communities, and we will likely be lobbying for changes to the swing bed limit in upcoming legislative sessions.

To read the swing bed legislation, click here and go to Article 11, Section 33.