The first of two, one-time state payments are on their way to Minnesota’s nursing homes, but facilities will not be able to use the funds for items that appear on cost reports, such as staff wages and benefits.
While lawmakers approved other funds that can be used to reward current staff or recruit more workers, advocates in the state said the approximately $300 million total will barely make a dent in clearing the logjam in hospitals. They have been struggling to place patients in need of sub-acute care.
Nor does the new funding address the state’s 21-month reimbursement lag, leaders said.
“Our argument was, ‘If you let us hire more folks, we can take more folks out of the hospital, but the only way to hire more people is to give nursing facilities more money for wages and benefits,” Toby Pearson, vice president of Advocacy for Care Providers of Minnesota, told McKnight’s Long-Term News Friday. “[The legislature] didn’t want to completely acknowledge that trade-off.”
In the closing hours of the state’s legislative session, lawmakers approved funds for three different buckets: $173.5 million for the Nursing Facility Grants; $51.5 million for an add-on to daily rates; and the remainder – approximately $75 million – for the Workforce Incentive Fund, which are workforce development grants.
The facility grants were broken into two equal allocations to be distributed on Aug 1, 2023, and Aug. 1, 2024. The formula started with a base amount of $225,000 plus $3,900 per facility per bed active as of May 12, 2023. An average 50-bed facility could receive $465,000 in grants, according to a press release from the Minnesota Senate Republican Caucus.
“There was concern that if you went with just size, the bigger facilities would get an overly disproportionate share of the money, and the rural, smaller facilities would not get enough,” Pearson said. “This way, everybody gets a decent amount.”
That funding can be used for things like physical plant improvements, especially if a facility does not want to request a moratorium exception for the project, catching up on rent, restructuring debt, or closing lines of credit, Pearson said.
A second pot of money – approximately $50 million – was approved for a temporary rate add-on of $12,35 per resident per day from July 1, 2023, through Dec. 31, 2024. These funds can be used for wages and benefits, Pearson said.
The third bucket – approximately $75 million – is for workforce development grants that facilities must apply for and explain how they plan to use the money, which is aimed at recruiting and retaining employees who earn $30 per hour or less, Pearson said. This is another allocation of one-time funding that will be available until all funds are spent or July 2029, whichever comes first; facilities are eligible for payments of up to $3,000 per worker per year.
“I think most people are using it for direct employee payments, whether that’s straight cash or additional contributions to 401(k)s,” Pearson said.
The money, though, does not totally resolve the workforce and funding crises the long-term care community in Minnesota is facing.
Hospitals throughout the state reported “thousands of incidents” in the first six months of the year in which older patients could not be transferred to nursing home either because beds were not available or admissions were being limited, according to reporting in the Minnesota Star Tribune. The Long-Term Care Imperative, a collaboration of aging services providers, found that 10% of nursing homes are considering closing and 15% had exhausted their financial reserves.
Since 2020, more than 2,597 nursing homes beds have bene taken out of service – that’s equivalent to more than 50, 50-bed facilities going offline, Pearson said.
“There’s been an ongoing conversation about hospital backups as a result of nursing home workforce challenges,” Pearson told McKnight’s. “A number of facilities are continuing to put beds on layaway because they don’t have enough workers.”
On top of that, providers still face the approximately 21-month lag between submitting costs and seeing reimbursement.
“We advocated that lawmakers work to reduce this time delay so that we have a reimbursement system that can truly support family-sustaining wages for caregivers, and lawmakers declined to take action on this priority in 2023,” Kari Thurlow, president of LeadingAge MN, told McKnight’s on Friday. “We also faced a perception that Minnesota’s nursing home cost-based reimbursement system will eventually ‘catch up’ to wage inflation.”
The funding package comes at the same time as the state has a historic, $17.5 billion budget surplus, but lawmakers have said that is from one-time money – mostly billions in dollars of federal COVID funds. Thurlow said lawmakers “constrained” funding for nursing homes to avoid long-term growth in the state’s general fund. But, she said that also prevents the money being used for permanent wage increases.
“We are proud of the hard-fought gains we made,” Thurlow said. “But there is still work to do to help lawmakers understand the critical role they play in helping us recruit and retain the workforce we need to care for Minnesota’s aging population.”