Nursing Home Bed Banking Proposal

Overview

Under 1995 Wisconsin Act 27, funding was reduced by approximately $15 million all funds in each year of the biennium to reflect reduced Medicaid payments to nursing homes through the application of a 91% minimum occupancy standard to the direct care and support services cost centers in the Nursing Home Payment Formula. Under the initial budget proposal, facilities under the 91% minimum occupancy standard would have received a cut in their Medicaid reimbursement rate that could be avoided only if the facility reduced its licensed beds by the lesser of 25% of their licensed bed capacity, or 50 beds. That provision later was modified to allow a facility either to accept the rate reduction or reduce its licensed bed capacity to the level that would give them a 91% occupancy. The "window" to reduce these beds to avoid a rate reduction was between July 1, 1995 and November 30, 1995 and between July 1, 1996 and October 31, 1996.

1997 AB 100/SB 77 Provision

The biennial budget bill would create a permanent "window" for nursing facilities below the 91% minimum occupancy standard to avoid a rate reduction by enabling such facilities to delicense, or "bank," a licensed bed. DHFS approval would be required to bank a bed. A nursing facility could not use or sell a bed that is banked; however, a facility retains the right to resume use and licensure of a banked bed 18 months after the facility notifies DHFS of its intent to remove the bed from the "bank." The proposal does contain a penalty for banking beds: Every 12 months after a bed is banked, the DHFS must reduce the facility’s licensed bed capacity by 10% of the facility’s banked beds or by 25% of 1 bed, whichever is greater. The statewide nursing home bed cap would be reduced by this same number. Finally, a nursing home may not resume licensure of a bed for which the licensed bed capacity of the nursing home has been reduced or of a fraction of a delicensed bed.

WAHSA Position

WAHSA historically has opposed and continues to oppose the 91% minimum occupancy standard. However, in order to avoid even more dramatic facility rate reductions, WAHSA supports the bed banking provisions contained in AB 100/SB 77, with modifications, as an acceptable compromise.

The bed banking provision makes a bad policy better.

• The 91% minimum occupancy standard presents a perverse incentive to providers to keep residents in their facilities longer than they need to be there in order to keep occupancy above the 91% level and avoid a penalty.
• Many of today’s nursing facilities specialize in subacute care or intensive rehabilitation services. The intent of this type of care is to reintegrate residents back to their place of residence in a setting that is significantly less costly than in a hospital. Since the average length of stay in such facilities, approximately 30 days, is significantly less than in a geriatric facility, it is not uncommon to have an occupancy of under 91% at various times during the year. To penalize such facilities both defeats the purpose of subacute/rehab care and ignores the significant cost savings this approach generates.
• Since the $15 million in savings generated by the 91% occupancy standard already is in the Medicaid appropriations base, its elimination, which clearly is the preference of WAHSA members, could result in a further reduction in the MA rate increase for nursing homes, an unacceptable alternative.
• While the bed banking proposal does not eliminate the 91% minimum occupancy standard, it does provide a mechanism to mitigate the rate reduction penalties that facilities under that minimum would incur.

WAHSA Proposed Modifications

AB 100/SB 77 requires a facility to provide the DHFS with 18-months advance notice of when it wishes to relicense banked beds. With the whirlwind pace of today’s health care market and with the managed care system that is the hallmark of what is expected to be the DHFS’ long-term care redesign proposal, 18-months simply is too long a timeframe to allow a nursing facility to react to the marketplace. WAHSA members suggest this provision be amended to require no more than 12 months advance notice for relicensing banked beds.

The Administration clearly has stated that banked beds remain the property of the nursing facility. However, the budget bill language appears to permit the delicensure of banked beds by the DHFS even after the facility has given notice it intends to relicense those banked beds. WAHSA members suggest this provision be amended to prohibit the delicensure of any banked beds once the facility provides notice to the DHFS it intends to relicense those beds.

The Wisconsin Association of Homes and Services for the Aging (WAHSA) is a statewide membership organization of not-for-profit corporations principally serving the elderly and disabled. Membership is comprised of 187 religious, fraternal, private and governmental organizations which own, operate and/or sponsor 143 not-for-profit and 50 county-operated nursing homes, 23 facilities for the developmentally disabled, 56 community-based residential facilities, 10 licensed home health agencies, 91 independent living facilities, 40 adult day care programs and over 300 community service agencies which provide programs ranging from Alzheimer’s support, child day care, hospice and home care to Meals on Wheels. For more information, please contact the WAHSA staff at (608) 255-7060: John Sauer, Executive Director; Tom Ramsey, Director of Government Relations; Brian Schoeneck, Financial Services Director.

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WAHSA 204 South Hamilton Street Madison, WI 53703
Telephone: (608)255-7060 FAX:(608)255-7064