By Dave Ranney, KHI News Service, June 19, 2008
LAWRENCE, June 19 — The Kansas Health Policy Authority board is leaning toward endorsing a provider tax on nursing homes that could generate up to $100 million a year in additional revenue.
“As it is now, we’re leaving a lot of money on the table,” said board vice chairman Joe Tilghman.
Tilghman, a former Centers for Medicare and Medicaid Services administrator, proposed including the tax in the health policy authority’s list of legislative priorities for 2009. He warned that federal officials are likely to begin “closing the window” on the controversial tax in about 18 months.
States that already have the tax, he said, likely will be allowed to continue receiving federal matching funds; those that haven’t imposed the tax will not be eligible for the additional revenue.
“We don’t have a lot of time,” Tilghman said during the board’s annual retreat Wednesday at the Eldridge Hotel in Lawrence.
Tilghman’s sentiments were seconded by Connie Hubbell, the board’s chairwoman.
“I would very much like to have the provider-tax discussion,” she said. “It could have a positive impact on generating additional revenues for the health reform budget.”
Hubbell is a former Kansas Department on Aging secretary. She served from 1999 to 2003.
The state’s nursing home lobby has been — and remains — divided on the provider tax. Generally, for-profit homes support it, nonprofit homes do not.
Earlier this year, the Kansas Health Care Association, representing the interests of the for-profit homes, urged legislators to impose a $4.75-per-resident-per-day tax, raising about $34 million. These revenues, in turn, could be matched with federal Medicaid dollars, generating an additional $49 million.
Eighty percent of the revenue would be returned to the nursing homes; 20 percent would be set aside for Medicaid spending in general.
How much a nursing home would get back would depend on how many Medicaid residents were in its care.
Legislators spiked the proposal after the nonprofit homes objected to the notion of taxing private-pay residents for the care of those whose stays are paid by Medicaid.
“We see the provider tax as a faulty mechanism. It’s poor public policy,” said Debra Zehr, executive director at the Kansas Association for Homes and Services for the Aged. “It will increase the cost of care on older Kansans who’ve scrimped and saved all their lives – and there’s no guarantee that they will get back any benefit. They’re being asked to share disproportionate share of the societal burden.”
Zehr said she was surprised to hear the health policy authority had discussed the tax.
“The lure of free money is always strong,” she said, “particularly at a time of budget constraints.”
Kansas Health Care Association Executive Director Cindy Luxem welcomed the discussion.
“Our desire, our commitment to this issue hasn’t lessened any since we got our behinds kicked back in February,” Luxem said. “But it can’t just be us coming to the table, there’s going to have to be more of a universal acceptance.”
Luxem said the tax, depending on how it’s structured, could generate as much as $100 million a year.
Department on Aging Secretary Kathy Greenlee, a non-voting member of the health policy authority board, assured her colleagues there will be a “major discussion” on the tax next legislative session.
“There’s strong support for it,” Greenlee said, noting her agency would remain neutral on the topic.
Board members also:
Plans now call for the health policy authority staff developing a budget and reform package for the 2009 session, which would be reviewed by the board in August.
-Dave Ranney is a staff writer for KHI News Service, which specializes in coverage of health issues facing Kansans. He can be reached at dranney@khi.org or at 785-233-5443, ext. 128.