Seniors in retirement facilities might not see reimbursements of proposed skilled nursing fee

By Steven Piper
Editorial Intern

California seniors’ retirement arrangements could be put in jeopardy if plans in California’s revised budget come to fruition.
According to the May revisions of Governor Schwarzenegger’s 2010-2011 budget, among his proposals to help close the state’s $19.9-billion deficit is to suspend multi-level retirement communities’ (MLRC) and continued care retirement communities’ (CCRC) exemptions from paying a quality assurance fee (QAF) for the skilled nursing services that they offer.
Residents from Bixby Knolls Towers (BKT), an MLRC facility located at 3737 and 3747 Atlantic Ave., have voiced concerns about the proposed tax. The community has a 90-bed skilled nursing facility.
Jackie Grover, president of the Residents’ Association of BKT, highlighted the issue in her letter to the editor in the Signal Tribune’s June 4 issue. “Our Governor wants to balance the State budget by doing away with our continuing care plus our right to die with dignity,” Grover wrote.
Additional letters to the editor have been published in other local news sources voicing similar concerns.
The retirement community resident also said the change in policy would cost BKT a total $407,340 to keep the beds available– an increase of $1,629 in each resident’s annual rent.
The budget’s May revision states: “Additional fees are generated by: (1) assessing fees on currently exempted multi-level retirement communities (this group currently benefits from related rate increases without contributing to the required state match)…” The rate increase would be one of three methods to make an $80-million increase in the California Department of Healthcare Services (CDHS).
According to the CDHS website: “The purpose of this program is to provide additional reimbursement for, and to support quality improvement efforts in, licensed skilled nursing facilities.” The fee was originally proposed in 2005 by Assembly Bill 1629, Health and Safety Code, Section 1324.20 through 1324.30 and 1324 through 1324.14. Since the fee has existed, MLRCs and CCRCs have remained exempt from the fee.
The QAF provides additional reimbursement for skilled nursing facilities through the virtue of its design. The fee’s proceeds are directed into the Medi-Cal budget, allowing the state to tap into funds from the federal government. The result has been more funding for Medi-Cal, allowing the state to pay higher reimbursements to nursing homes that serve Medi-Cal-eligible clients.
Jack Christy, director of public policy at the leading senior advocacy group Aging Services of California (ASC), opposes the tax. In an article Christy wrote, which is publised on the group’s website, he stated, “And finally, while a small number of CCRCs and MLRCs across the state have an elevated Medi-Cal census, the vast majority have no Medi-Cal residents.” If an MLRC or CCRC does not have any Medi-Cal residents and they are forced to pay the QAF, then they are not going to see any reimbursements that the fee was originally designed to generate.”
The director also said lifting the exemption would make residents the targets of an unplanned increase in their retirement plans, which have been arranged years in advance. “It is an unfair situation overall,” Christy said.
Assemblymember Bonnie Lowenthal said she would be willing to hear all arguments regarding the topic. “There are a lot of moving parts in the subject. As I understand it, right now the fee is charged to Medi-Cal, providing higher reimbursements,” Lowenthal said. “It has worked for nursing homes. The question is whether it would work for the MLRCs.”
Last year, AB 411, which was authored by Assemblymember Hector La Torre, attempted to repeal the exemption, but it died in committee. The bill called for CCRCs to pay the QAF until July 31, 2010.
According to ASC’s website, AB 1629 dictates that, for communities with fewer than 100,000 patient days per year, every nursing home bed must pay $11.16 a day, $335 per month, and $4,018 per year in taxes. “This annual cost would have to be absorbed by all of us at every level,” Grover wrote. “Soon I would be forced to move out as I no longer could afford to live here!”

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