Lawmakers Call For Increased Scrutiny Of Disability Payments

One of the ways some lawmakers in Olympia are proposing to increase state revenue is to create a new bed tax on state nursing homes. The move would further game federal entitlements by increasing the federal match for the Washington state Medicaid program. A similar proposal would create an increase in the state tax that care providers for the disabled must pay. This money would be placed in an account which would receive an increased match from the federal government for the disabled. Providers taking care of the disabled would then be reimbursed for the amount the tax increase from the increased federal Medicaid matching dollars.

Medicaid is a safety-net health insurance program for poor children and their families, the disabled and people requiring long-term care. Funding for Medicaid comes from a federal/state taxpayer match. The program is inherently unsustainable and has been chronically underfunded and over budget since its inception in 1965.

Medicaid law allows states to assess a tax on providers that is then added to the state’s portion of Medicaid funding. The federal government must then increase the amount of matching money it sends to that individual state. The Medicaid tax is not a real tax in the normal sense of the word. States use various financial mechanisms to return a portion or all of the provider tax back to the providers.

The result is a laundering scheme that shifts state nursing home costs and the cost of care for the disabled to federal taxpayers without imposing a direct tax increase within the state. Of course state residents are also federal taxpayers, so even people in the state that benefit will see an increase in the cost of paying for federal programs. Forty-four states now take advantage of this legal “loophole.”

Below is a description of how the nursing home bed tax bill that has been proposed this year would work. It would:Make various revisions to nursing home payments.

Replace the use of general economic trends with an annual inflation adjustment based on the rise of skilled nursing home costs.

Raise the lid on allowable costs from 100 percent to 105 percent in the operations component.
To improve the quality of nursing home care, require the design of a quality incentive payment system that must be submitted to the legislature by December 15, 2011.
Authorize Department of Social and Health Services (DSHS) to administer and collect a skilled nursing facility safety net tax.

Require DSHS to seek federal approval of a waiver for a broad-based and uniform provider assessment fee.

Establish the Skilled Nursing Facility Safety Net Trust Fund in which all revenues from the fee would be deposited for the purpose of reimbursements and Medicaid payments for nursing facility services.
Prohibit nursing facilities from increasing charges to the patients or third-party payers as a result of the new state fee.

The tax on providers taking care of the disabled would work in a similar fashion. It would:
Add community residential service businesses to the public utility tax at a rate of 5.029 percent.
Place revenue into accounts to provide for Developmental Disability Community Residential vendor rates and enhance compensation to staff providing habilitative instruction and support services.
Require that whenever vendor rates for supported living providers are modified, the rate must be allocated so that the difference in rates paid between King and Snohomish counties remains the same as established in 2010.

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Lawmakers Call For Increased Scrutiny Of Disability Payments