Nursing homes on front line as White House weighs 'bed tax' reform

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Deficit-reduction plan to gain $600 billion from lower provider payments and higher beneficiary prem
Deficit-reduction plan to gain $600 billion from lower provider payments and higher beneficiary prem

Nursing homes could be hurt if the federal government lowers or eliminates the Medicaid provider tax threshold to reduce the national deficit, according to a recent report from the Congressional Research Service (CRS).

Forty-three states have a provider tax, also known as a “bed tax,” on nursing homes, and states use provider tax revenue to help finance Medicaid. That in turn pays for a bulk of nursing home care. Lowering the safe harbor threshold to 3.5%, as proposed in the White House's 2013 budget, would limit states' abilities to fund Medicaid through the tax, and would reduce matching Medicaid funds provided by the federal government.

The White House budget estimates the government would save $21.8 billion on federal Medicaid payments between 2015 and 2022 if the threshold were lowered.

The CRS report was released Jan. 11. State government officials and providers have previously criticized proposals to lower the threshold. Reports like CRS's fall short in considering how policy translates to real-world outcomes for people, says American Health Care Association spokesman Greg Crist.

“What's missing in these reports is the human element – the complete picture of who provider assessments directly benefit and how their lives are changed for the better because of the care they receive in our centers,” Crist says. “This is a significant source of income for providers who already face a significant shortfall in Medicaid reimbursement. If those assessments are scaled back, there's real concern those less fortunate patients and residents won't be able to have their care paid for by Medicaid.”

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