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Paynesville Press - June 7, 2006

Nursing home reimbursement rate increases

By Melissa Andrie

Koronis Manor, along with other skilled nursing homes in Stearns, Benton, and Sherburne counties, will be reimbursed by the state at a higher rate, starting in July. This year, the state legislature passed an increase, giving these 13 facilities in these counties a metro designation for operating cost reimbursements.

For the Koronis Manor, this will mean a funding increase of slightly over $100,000, estimated Beverly Mueller, the director of acute care at the Paynesville Area Health Care System (PAHCS), which operates Koronis Manor.

In Stearns County, the change should bring nursing homes a total of about $1.8 million in increased funding, calculated Rep. Larry Hosch (DFL-St. Joseph).

The change was included in a large supplemental budget bill that was supported by many local legislators. Sen. Steve Dille (R-Dassel), Sen. Michelle Fischbach (R-Paynesville), Sen. Dean Johnson (DFL-Willmar), Rep. Bud Heidgerken (R-Freeport), and Hosch all voted in favor of it. Rep. Dean Urdahl (R-Grove City) was excused from voting.

Nursing homes are reimbursed from the state for those residents on Medicaid. According to Kirk Johnson, PAHCS's chief financial officer, approximately 70 percent of residents at Koronis Manor receive Medicaid-funded care.

Overall, reimbursement for each patient will increase about 9.5 percent. The exact amount is determined per patient, according to the amount of care needed, so overall impact will vary slightly with each facility. Patients are split into 36 levels of functionality, and reimbursement is calculated from these levels.

Nursing home funding is split into categories such as direct and indirect care funding and property funding. This increase is not designated for a particular fund, so each nursing home will choose where to apply it.

Since 1985, Minnesota nursing facility reimbursement has followed geographic regions. The regions were drawn up based on nurse's salaries in 1983. Stearns, Benton, and Sherburne counties, though they have a metro designation federally, have state reimbursement rates in the middle of the three categories.

That is only until July 1, however. At that time, this increase will go into effect, and the 13 skilled nursing facilities in these three counties will be reimbursed at rates equal to those metro counties receiving the highest levels of funding.

The rate change will not apply if no reimbursement increase will occur with it.

Nursing homes must charge private pay patients the same amount that they receive in reimbursement for patients with Medicaid. Private pay patients include those with Medicare and with private insurance policies covering the costs.

Costs for these residents - about 30 percent of those at the Koronis Manor - will be determined the same way, and they will face increased charges accordingly.

A consortium of advocates from nursing homes in these three counties began to work with local legislators in 2001 to get this increase passed, according to Phil Lord, the administrator at the Belgrade Nursing Home. Besides the Koronis Manor, his is the nursing home nearest Paynesville receiving this rate increase.

Local legislators have been very supportive of this increase, and that is appreciated by the facilities, according to Lord and Steve Moburg, chief executive officer of PAHCS. This was important, said Mueller, because "for some nursing homes, it definitely is survival."

Heidgerken - who called this change his biggest accomplisment of the year - and Johnson were chief authors of bills proposing this change this year, in the House of Representatives and Senate, respectively. Other local legislators have authored such bills in the past.

In fact, two years ago, area nursing homes thought this funding increase had gone through, said Moburg. However, it was not implemented because of differences in interpretation.

Last year, local legislators tried to pass a bill clarifying the first bill, but that failed, said Lord. This year, then, legislators tried again.

A need to "maintain the quality of care for residents meant the parking lot went without resurfacing" at some facilities, noted Lord, and this increased reimbursement will help cover such costs.

Staff wages may also be increased at some facilities. All nursing homes received a 2.26 percent funding increase from the state this year, which they will get next year, as well. That is due to legislation passed last year.

Of that 2.26 percent, three-fourths must be used for wages and benefits increases for employees other than nursing home management, administrators, and central office staff.

However, the slight wage increases from that extra funding have been below the cost of living increases that have occurred since most nursing home workers had a pay freeze several years before that.

St. Cloud nursing homes have been paying their workers salaries only slightly under metro rates, which will be more achieveable for all nursing homes in these counties now, said Mueller.

This is key to the care residents receive in local nursing homes, said Lord, who made 30 trips to the state legislature over the past four or five years to advocate for this funding change. Area nursing homes compete with metro nursing homes for staff, and qualified staff are essential to a quality nursing home, he explained.

Residents and their families pick nursing homes based on where family members live, where residents grew up, and where openings are available, according to Moburg.

None of those factors can be influenced by added funding. However, the skill of nursing staff and the care provided in different areas such as speech, occupational, and physical therapy, is also important in such decisions, he said. State reimbursement rates come into play when these factors are considered, Moburg and Lord agreed.

A number of nursing facilities in Paynesville and the surrounding area do not qualify for this change, because they are not considered skilled nursing homes. Hilltop Care Center in Watkins also does not qualify, because it is just across the Stearns County line in Meeker County.

Starting in October, the overall nursing home funding formula in the state will be changed. Rather than being based on past costs, which can penalize cost-efficient facilities, said Johnson, the new system will be performance-based.

Five factors influence quality of life for residents will be assessed by the state. Varied methods will be used, including suveys, resident satisfaction ratings, resident interviews, and statistical information, such as turnover rates.

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