SNFs in Ohio make major changes in operations and services to deal with Medicaid bed tax

Ohio Health Care AssociationDec 15 2009

Skilled nursing facilities (SNFs) in Ohio are making major changes in operations and services in order to deal with a 92 percent increase in the state-imposed Medicaid bed tax (franchise permit fee) from $6.25 to $12.01 per bed per day, scheduled for December 15. The increase means that the average facility will pay an additional $17,520 to the state each month, or $210,240 per year, for a total tax of $438,365 yearly.

Nearly 96 percent of skilled nursing facilities responding to a survey released today indicate that they believe the tariff will have a negative impact on their ability to provide quality long-term care services. The providers are cancelling raises, trimming benefits, reducing staff, delaying or dropping improvements and renovations, and making other cuts to prepare for the payment.

The bed tax is assessed on top of all other taxes and fees SNFs pay, including property taxes and income taxes. The tax is similar to the one recently assessed on Ohio hospitals, which reportedly has caused hardship to the hospital community.

"Following a 5-year trend where reimbursement for services has not kept up with rising costs - and years with actual cuts in payments - Ohio's skilled nursing facilities are now expected to take an additional loss of $186 million over the next two years," said Peter Van Runkle, Executive Director of the Ohio Health Care Association (OHCA), which conducted the survey. OHCA is the state's largest organization representing long-term care facilities.

The survey (www.ohca.org/uploads/news/State_Budget_Impact_on_SNFs.pdf) finds that 63 percent of the facilities responding had already implemented changes in services, with nearly 30 percent more planning adjustments. Nearly half have cancelled or delayed maintenance, renovations or additions with another 35 percent still contemplating changes. Half of the facilities had already or planned to lay off staff and nearly 78 percent have reduced or plan to reduce staffing hours.

"Because the provision of long-term care services is labor intensive and Ohio's providers have had to 'make do' for so long, there are few areas where reductions can be made without directly impacting workers or resident care," said Van Runkle. "Our survey raises concerns that some homes may close or be forced into bankruptcy as a result of the increased fees."

The Association has sent a letter (www.ohca.org/uploads/news/FPF-letter.pdf) asking the legislature to reduce the bed tax back to the original $6.25 level.

Another study released last week showed that Ohio ranks third in states with long-term care under-funded by Medicaid, to the tune of $306 million per year. The Eljay LLC analysis (http://www.ahcancal.org/News/news_releases/Pages/NewMedicaidStudyPaymentGap.aspx) of the nation's Medicaid financing system finds seniors in the states of New York, Illinois and Ohio will bear the brunt of Medicaid payments that do not cover operating costs.

"Our members tell us that they are in trouble, and they are concerned about their residents, their employees and their businesses," said Van Runkle. "New lines of credit are not available and existing credit is being cancelled because banks are unsure of facilities' ability to pay. Payments to vendors and creditors are being delayed. Facilities are reducing their participation in employee retirement funds, and the impact on morale is incalculable. We have worked hard to prevent any impact on patient care - but at some point it is inevitable."

"Every dollar affects the care of some of the most vulnerable citizens of this state," he added. "The prospect of still more cuts and the human cost they would entail is frightening."