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Godfather of Basic Health Plan Pushes Idea That Could Raise $30 Million For Program – But is it a Fee or a Tax?

Article by Erik Smith. Published on Wednesday, March 02, 2011 EST.

Joe King Pitches Nursing Home ‘Safety Net Assessment’ – Budget Crisis Gives Old Plan New Oomph, but Revives Lobbying Fight With Non-Profits


Former House Speaker Joe King, now one of the Washington Legislature’s most prominent lobbyists.

 

By Erik Smith

Staff writer/ Washington State Wire

 

OLYMPIA, March 2.—Joe King, the former speaker of the state House who is now one of the biggest guns in the Legislature’s corps of contract lobbyists, is helping push an oft-talked-about plan that could leverage millions of federal dollars for the state’s nursing homes – and maybe raise $30 million this year for the Basic Health Plan or other threatened state programs.

            It’s another chapter in a fight that has long raged in the state Legislature, but the state’s current budget crisis is giving this year’s proposal a little oomph. King is doing battle on behalf of the Washington Health Care Association, an organization representing the state’s for-profit nursing homes. Yet any longtime observer of the state Legislature has to concede the significance of his involvement.

            As House speaker from 1987 to 1992, King was one of the biggest boosters of the Basic Health Plan – maybe not the one who came up with the idea, but certainly the one who put it over when the Legislature expanded it to cover the entire state. This year the cash-strapped Legislature is contemplating an end to the subsidized health insurance plan for the working poor, and lawmakers are working feverishly to find ways to save it.

            King asks: Would $30 million or so in free money help?

            “It all depends on where the Legislature sets the rates, but it could benefit the BHP or other programs,” King said.

            So far this session the idea has been perking just below the level of public notice, prompting an under-the-radar lobbying battle between the for-profit nursing home industry and the non-profits, which say they would suffer. But it’s probably not going to stay that way for long. If lawmakers are going to do something about it, they have to act before the end of the month.

And some think it all sounds a little gimmicky – but this is the kind of year when people clutch at straws. “If you float $30 million around Olympia, you’re going to get some takers,” said state Rep. Joel Kretz, R-Wauconda.

 

            Some Call it the ‘Granny Tax’

 

            The idea actually has been around for years, and it’s a pretty tricky thing to describe. First problem is what to call it. The for-profit nursing home industry calls it the “safety net assessment.” That’s because whether it is a fee or a tax is a critical legal question that will become a major issue if the proposal makes it to the House or Senate floors.

            But in years past, it’s been called the “nursing home bed tax,” and it works like this. The state would impose an additional charge on the bills paid by nursing home patients – $17.55 a day, under the latest iteration of the proposal.

            By imposing the charge, the state has to pay more when a Medicaid patient stays at a nursing home, even though the money comes right back to the state. But then it can bill the federal government more, because the feds pay at least half of the Medicaid tab.

            Then the state can turn around and plow additional federal money back into the state’s nursing homes.

            If it all seems a little goofy, it’s a strategy that has been accepted by the feds. Some 37 states already use a mechanism like it for nursing homes. This state adopted a similar strategy for hospital reimbursements last year, and operators of residential homes for the developmentally disabled have been urging the state to do the same thing for them. In the nursing-home area, Washington actually used the strategy from 2003 to 2007.

            It was shot down in large part because of the politics surrounding the 2004 governor’s race. In the Legislature, Republican candidate Dino Rossi had been one of the biggest backers of the idea. Democratic opponents called it “the granny tax.”

 

            An Extra $30 Million or So

           

            The proposal comes at a time when the Legislature is contemplating devastating cuts to nursing home payments as a result of its multi-billion-dollar shortfall, possibly forcing the closure of nursing homes in rural areas. And if the feds are willing to pay millions of dollars, why not take the money? asks Rich Miller, president of the Washington Health Care Association.

            “I would like to think that’s a no-brainer,” he told the Senate Ways and Means Committee last week.

            And there’s a bit of frosting on that cake – what you might call the “King Plan.” By levying the maximum charge possible, the state would net about $122 million every two years. That’s more than enough to pay for the amount the state already shorts nursing homes in Medicaid payments – about $28 a day, now shifted to private-pay patients – and it could also make up for further cuts that may be contemplated this year.

            It also leaves about $30 million that could be used for other purposes – the Basic Health Plan or anything else.

            Under proposals filed in the House as HB 1722 and in the Senate as SB 5581, the plan would kick in April 1, but nursing homes would pay the charge for the entire 2009-11 budget period, presumably getting a quick reimbursement. So that’s $30 million right away and another $30 million during the 2011-2013 budget period.

The idea is that the extra $30 million in the next budget would be plowed back into the state’s long-term care system – though of course that’s the Legislature’s decision. The plan has won a resounding endorsement from senior-citizen organizations that worry about the financial health of the nursing home industry – among them the Eldercare Alliance and Washington State Senior Citizens Lobby. “Often, when we meet with legislators, they say, do you have a brilliant, bright idea for revenue?” said Karen Lee of the American Association of Retired Persons during a Senate hearing last week. “This is one of them.”

 

            Taxing Patients for Other State Programs

 

            So what’s the problem with free money? Plenty, say the non-profit homes. All patients have to pay the tax – that’s a federal rule. So the money comes not just from Medicaid or Medicare patients, but also those who pay out of their own pockets. On average, Medicaid pays for about 60 percent of nursing home beds. But nursing homes that don’t have a big population of Medicaid patients don’t get the big benefit.

            And when you consider that most nursing home patients are in for the long haul, it’s a pretty big tab they have to pay. Vicki Christophersen, representing Providence Health and Services, told the Senate panel last week that this year’s proposal amounts to a $6,000-a-year tax on private-pay patients – about triple the amount that was levied between 2003 and 2007.

“In our minds, it is not fair to private pay patients in Washington who have saved their money and are doing the right thing in paying for their own care,” she said.

It offers nothing in the way of a long-term reform to the state’s long-term care system, she said – which often pushes patients into highly skilled nursing facilities when less-expensive care might suffice. Worse yet is the idea that nursing home patients might be taxed to pay for programs that have nothing to do with long-term care. And then there’s the suggestion that the Obama admistration may be leaning away from such financial cleverness in future budgets – meaning it may not exactly be a stable funding source.

Robert Hellrigel, chief executive of senior and community services for Providence, had this to say:

“Providence Health and Services will not support a bill that creates a significant tax on private-pay patients who reside in a nursing home in an attempt to prop up a long-term care system that has failed to evolve to meet the needs of people in our communities. People who pay for long-term care services in Washington state with their own resources already subsidize the care of their neighbors in the Medicaid program. This bill, as currently drafted, also provides $30 million for the 2011-13 biennium to be supplanted to the general fund which will not benefit nursing homes or their residents. In adding to the subsidy of Medicaid residents in Washington state nursing homes, the bill asks private-paying nursing home residents to fill in the deficit in our state budget.”

 

            Political Realities

 

Maybe it isn’t the most wonderful solution in the world, but advocates say it’s the best one out there. Everything evens out in the end, they insist – once private-pay patients exhaust their own money, they move to Medicaid. They’d just move sooner. Might force some nursing homes to take greater numbers of Medicaid patients, but backers say it’s the solution that provides the greatest benefit to the nursing home business as a whole.

Ross Hunter, chairman of the House Ways and Means Committee, said it’s something he’s willing to consider, as long as there aren’t any horrible side-effects. “I have rejected some of these schemes in the past – including that one, last year, because it wasn’t baked. But they have spent a full year baking it more.”

It’s all going to come down to politics. Judging by the furor from some Democrats a few years ago, it’s going to take Republican votes to pass it. If the measure comes to the House or Senate floors, a challenge is inevitable on whether it is a fee or a tax. And ultimately it’s going to come down to a ruling from Lt. Gov. Brad Owen, the presiding officer of the Senate who is seen as the Legislature’s most impartial judge of such things.

Under the terms of Initiative 1053, approved by voters last year, a fee requires a majority vote, and a tax requires a two-thirds vote. More importantly, if it is ruled a tax, Republicans are going to run from it, Kretz said. “If it’s ruled a tax, I don’t think you’d see any support from our caucus,” he said.

            House Republicans right now are working on a counter-proposal that aims to pump more money into nursing homes, just in case. And to be fair, it’s just as complicated as this one.  


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