Nursing homes

Minnesota’s struggling nursing homes gained some breathing room with the passage of legislation that bases Minnesota’s Medicaid payments on facilities’ actual operating costs.

It not only helps ensure the future for nursing homes, many of which were on the verge of closing, but also closes the pay gap for nursing home staff in Greater Minnesota compared to workers at larger metropolitan facilities.

Minnesota’s nursing homes have been struggling financially since the state departed in 1995 from a formula that based Medicaid reimbursement on the home’s actual costs. A fix proposed by the 2007 Legislature that would phase in higher reimbursement rates fizzled when the state suspended rebasing in 2009 due to budget woes and then repealed rebasing in 2011.

The funding crisis was compounded by the fact that Minnesota’s equalization policy means nursing homes can only charge private residents at the same rate that the state reimburses nursing homes. The gap between actual costs and reimbursement by the state has now grown to $30 or more per resident per day.

A lack of funds put a significant percentage of the state’s nursing homes, especially in rural communities, in danger of shutting down. Those able to weather the shortfall had to tighten their belts, which often meant little to minimal pay increases for staff.

That, in turn, has created an employment crisis with most nursing homes reporting high turnover in staff and an inability to fill job openings as their inability to pay acceptable wages led to a shortage of quality candidates.

With the state now committed to bringing reimbursement rates more in line with actual costs, nursing homes have been tossed a lifeline. Nursing home workers should be among the beneficiaries by receiving better pay that more fairly compensates them for a difficult and often thankless job. The pay boost and a scholarship component in the legislation could also encourage more graduates to seek careers in long-term care.

The need for such caregivers is clear in a graying Minnesota. Projections show that 60,000 of the state’s residents will turn 65 this year and that number will remain consistent for every year until 2030. Although there are a variety of options now available to seniors such as assisted living centers and home health care, a percentage will need the more intensive care services of nursing homes. Making sure the state has a workforce prepared to meet that challenge is a must.

The timing for addressing the inequities in funding for nursing homes was also right with the state sitting on a $2 billion surplus. The cost of providing the boost in Medicaid reimbursements is expected to cost about $196 million over the next two years. And that price tag will undoubtedly grow in the future as the cost of providing services rises.

But the alternative would be far more costly in the toll it would take on some of the state’s most vulnerable citizens. The closure of more nursing homes would have cut lifelong ties that many have to their communities, imposed a hardship on families and struck an economic blow in small communities that rely on the jobs provided by nursing homes. This renewed investment in nursing homes helps spare rural residents and communities that hardship.