Would Save State $27 Million, But Bill is Stuck in Committee

Gary Weeks, president of the Washington Health Care Association.

By Erik Smith

Staff writer/ Washington State Wire

OLYMPIA, March 10.—Gary Weeks is pacing the corridors of the Capitol building, just like dozens of other lobbyists and association representatives in the final days of this year's Legislature. His big bill of the session is bottled up in committee, and he hopes to get it pulled to the House floor before the clock runs out Thursday on the 2010 session.

            “Our bill is still in Ways and Means, but they could still have a vote on it,” explained Weeks, the president of the Washington Health Care Association, which represents the state’s for-profit nursing homes.

            And so Weeks, a former director of the state Department of Labor and Industries, finds himself waiting by the doors of the House chamber, sending notes to members, talking to them whenever they step outside, and hoping he might be able to win over enough of them to get the House leadership to take action. 

            Plenty of other lobbyists are in the same boat. It happens at the end of every legislative session. But there’s something a little funny about Weeks’ case. He has a bill that could save the state $27 million, in the middle of one of its worst budget crises ever. For some reason it isn’t going anywhere.

            Revives Bed Tax

Weeks’ association is pushing for a revival of the nursing home bed tax that was levied by the state between 2003 and 2006. It’s a way of goosing the amount nursing homes get from the state in the form of Medicaid payments, without actually costing the state a dime.

            Under the plan, the state would impose a $7.50 daily tax on nursing homes for each patient they serve. The tax would be included in the rate that is charged to the state. The nursing homes get the money back from the state because Medicaid payments are higher. And the reason for the machination is that it would allow the state to turn to the federal government for more money. The federal government pays about half the cost of Medicaid programs, and sometimes considerably more, as it is right now because of federal stimulus legislation that pumps more money to the states.

            The mechanics are a bit of a shell game, Weeks admits, but 37 other states already do it. In fact, a similar “provider tax” for hospitals has won approval in the House this year, though the Senate has yet to take action.

            The nursing home plan would generate $27 million in additional federal money through June 30, 2011, and would make up for a 7.6 cut ordered by last year’s cash-strapped Legislature. Those cuts never took place. Nursing homes filed a lawsuit and obtained a temporary restraining order last summer that prevented the cuts from going through. So right now the state is paying $1.5 million a month that it hoped to cut from its budget. If the bill passes, the Health Care Association would drop the suit, Weeks said – there wouldn’t be any need for it.

            An extra $27 million might come in handy for the Legislature right now, Weeks said. “They could use it for anything,” he said. “They could use it for in-home care. They could use it for adult day health.”

            Lawmakers also could use it to reduce the tax increases they are contemplating this year.

            But Weeks’ proposal, filed as House Bill 3021 and Senate Bill 6751, stalled in the budget committees of the House and Senate and never got a vote.

            So What’s the Problem?

            The trouble appears to be the memory of what happened the last time the state tried it. Back in 2003, lawmakers thought the nursing homes had a good idea – but then scarfed up 75 percent of the proceeds for the state general fund. Nursing-home operators were furious. Just as furious were the private-pay patients who saw the new tax as a line-item on their bills.
            Democrats turned it into a political issue. The tax was launched by then-Sen. Dino Rossi, who was chairman of the Senate Ways and Means Committee during a brief period of Republican control. When he ran for governor against Christine Gregoire in 2004, Democrats chided him for the “granny tax,” or worse, the “Dino Rossi bed tax.”
           By 2006, everyone had enough. Lawmakers repealed it, and many remember. During a hearing of the House Ways and Means committee last month, House Majority Leader Lynn Kessler, D-Hoquiam, asked Weeks, “How I respond to people who say this is the Dino Rossi bed tax?”
            Weeks and his group tried to deal with the troubles as best they could. The bill specifically earmarks the proceeds for nursing homes – though of course, there is no way to write a bill that a future Legislature can’t change. But it also specifically prohibits nursing homes from passing on the cost to patients.

            “No one can call it a ‘granny tax’ now,” Weeks said.

            
            Nursing Homes Not United

            Just as problematic is the fact that not everyone in the nursing-home world is behind it. Opposition is being mounted by Aging Services of Washington, the organization representing the state's non-profit nursing homes. CEO Deb Murphy argues that the guarantee in the bill just isn’t ironclad enough. At the same Ways and Means hearing last month, she said, “It feels a lot like 2003 to me.”

            There’s also a cash-flow problem, she said. Nursing homes would be required to put up the money, and then wait for federal approval. The measure contains several provisions designed to exempt smaller nursing homes, and that requires a waiver from the federal Centers for Medicaid Services. If the proposal is rejected, the money is supposed to be returned – but in either case, nursing homes would have to wait some time before they see a dime.

            Lawmakers say they just aren’t eager to step into that hornet’s nest again. State Rep. Eileen Cody, D-Seattle, remembers what happened the last time. “I have a mother in law that’s in a nursing home, and I go every week to see her,” said Cody, chairwoman of the House Health Care and Wellness Committee. “Every week I went in and got yelled at by many of my constituents who were also in the nursing homes that were private-pay patients, and I have to say that I really got sensitized to the issue. I know that people are trying to say that this isn’t the bed tax, but simply a business tax. But we can’t guarantee that it won’t be passed on to the private pays.”

            Last-Ditch Efforts

            Last week a bipartisan group of lawmakers mounted an effort to tack the nursing home tax bill onto the state budget as it passed through the House. The amendment was widely supported by Republicans, but it was sponsored by a Democrat, Geoff Simpson of Covington.

            “One of the unfortunate ways our Medicaid system is set up is that you have to establish some of these elaborate mechanisms in order to get your fair share of state Medicaid funding,” Simpson said. “It just makes sense that we should employ this mechanism to get more of our federal dollars back, federal dollars that the taxpayers in this state have paid to the federal government, money that we’re not getting back.”

            Said Mike Armstrong, R-Wenatchee, “I think this is a smart move to help some folks that truly need some help just staying alive and staying in business, and they help some of the most vulnerable people in our society. And as I look around the room, I see many of us are getting close. So let’s think about that when we vote on this.”

            But leaders on both sides said no. The attempt failed 41-57.

            Meanwhile in the Senate, Health and Long-Term Care Chairwoman Karen Keiser, D-Kent, said that the division among nursing homes makes the proposal a tough sell. “I don’t see anyone supporting it at the level where we can start the bill moving,” she said.

            Keiser has proposed a measure that makes adjustments in some nursing home reimbursements and reduces the impact of state cuts, but in terms of dollars doesn’t come close to Weeks’ plan.