Issue Paper

To: All Legislators


Issue: Support For a Wage Pass-through
for Nursing Home Employees

Our varied memberships share a common goal:  To ensure the quality of care and the quality of life of each nursing home resident in Wisconsin.  We also share a common concern:  Namely, that the heavy dependence of nursing homes on increasingly inadequate Medicaid funding, combined with the State's extremely tight labor market, make it increasingly more difficult for nursing homes to recruit and retain caring and competent staff.  To avoid a potential crisis in care, the above organizations, which represent both nursing home operators and the caregivers they employ, unite under the name "Coalition for Quality Nursing Home Care" and seek your support for a 7% nursing home employee wage pass-through.

The proposed Medicaid rate increase for nursing homes contained in SB 45/AB 133, the biennial budget bill, simply magnifies the problem.  The $15 million "rebasing" of the nursing home formula in FY 1999-00 and the 1% rate increase proposed for  FY 2000-01 fall far short of meeting the costs facilities already have incurred to serve their Medicaid residents.  Indeed, Data Resources, Inc. (DRI), the firm the State uses for its own economic forecasting, has projected a 3.3% increase in health care costs due to inflation for 1999.

If the rate increases provided in SB 45/AB 133 fall below the rate of inflation in health care costs, which we anticipate, then many facilities will be facing rate cuts and the possibility of staff freezes or cuts.  Without an adequate Medicaid rate increase, the benefits of a wage pass-through will be lost because facilities facing a rate cut would be forced into the perverse position of rewarding one employee with a wage increase funded by the pass-through and by the termination of a position(s).  Even with a 3.3% rate increase, some facilities will experience rate cuts and would need to utilize funds from a wage pass-through to retain current positions.

In order to maximize the benefits to our caregivers of a wage pass-through, we also respectfully request legislative support for a 3.3% rate increase for Medicaid-certified nursing homes in each year of the biennium.

Coalition for Quality Nursing Home Care Wage Pass-Through Proposal

Under the Coalition proposal, all nursing home employees except the administrator and home office staff would be eligible for the wage pass-through, which could be used to increase wages, benefits, the number of staff and/or to offset potential nursing home rate cuts that would occasion staff reductions. The wage pass-through would be
in addition to the 3.3% rate increase proposed above.  A nursing facility would be required to apply to the Department of Health and Family Services (DHFS) in order to receive the wage pass-through; a DHFS review of the facility's Medicaid cost report would ensure that the funds are spent for the intended purposes.  Failure to expend the wage pass-through funds for their intended purpose would result in the recoupment of those funds by the DHFS.

The benefits of this proposal are clearly illustrated in the following table, which highlights the wage increases for selected nursing home employees that would be generated if the 7% wage pass-through were to be used to increase wages (rather than increase benefits, increase staffing and/or offset facility rate cuts and corresponding staff cuts):


1997 Average Wage/Hour

1997 Annual Wage

7% Increase/Hour

1997 Annual Wage w/7% Increase

Registered Nurse





Licensed Practical Nurse





Certified Nurse Assistant





Food Workers




















Annual Projected Cost:  The projected cost of this proposal admittedly is hefty:  We estimate a 7% wage pass-through would cost approximately $17 million GPR and $41.3 million all funds in FY 1999-00.  With the inclusion of a 3.3% rate increase, which we estimate would cost an additional $5.4 million GPR and $13.1 million AF over SB 45/AB 133 levels, the total request is estimated at $22.4 million GPR and $54.4 million AF in FY 1999-00 over the amounts included in SB 45/AB 133.  But the members of the Coalition for Quality Nursing Home Care firmly believe both our wage pass-through and our rate increase requests are needed and justified.

Why is a Wage Pass-Through Critically Necessary?

The reasons we request this wage pass-through proposal are numerous.  Consider the following:

  1. The number of full-time and part-time jobs open during the week of May 18 in the Milwaukee-area was the highest since 1995; employers were looking to fill 19,259 full-time positions and 15,263 part-time positions.  Those figures had risen to 21,515 open full-time positions and 15,476 open part-time positions when a similar survey was conducted during the week of October 19, 1998.
  2. For entry-level jobs demanding a high school diploma but little else, employers were paying an average of $7.90/hour last May; that figure rose to $8.07 in October.
  3. Companies offered at least $8/hour for nearly half the beginning-level, full-time positions they were trying to fill - jobs that required neither a high school diploma nor any work experience.
  4. When employers are attempting to fill positions with job responsibilities that include caring for extremely frail elderly people, many of whom suffer from dementia or are otherwise behaviorally difficult, at a wage that is comparable to a fast-food restaurant employee or other beginning level jobs, is it any wonder the UW-Milwaukee study placed the position of CNA at the top of its list of the most difficult positions to fill?
  5. Once again, keeping in mind the wage and the job responsibilities of a CNA, the dilemma facing nursing homes is clearly illustrated in this recent Milwaukee Journal Sentinel quote from John Metcalf, director of human resources policy for Wisconsin Manufacturers and Commerce (WMC), in response to the UW-Milwaukee study:  "People can easily walk across the street and find another job for 50 cents more.  Workers, for whatever reason, are not staying long in one place.  Jobs are plentiful.  They can choose when they want to work and when they don't want to."

The Minnesota Legislature last session passed nursing home wage pass-through legislation similar to what we are proposing.  In a 3/10/98 editorial in support of that measure, the Minneapolis Star Tribune wrote:

"Every day, someone must feed, bathe and clothe many of the people who live in nursing homes.  Someone must help  many of them walk, or get into a chair, or move their wheelchairs.  Someone should greet them cheerfully, listen sym pathetically, and offer the simple comforts of a smile and a tender hand."

We Need Your Support

We ask members of the Legislature to join members of the Coalition for Quality Nursing Home Care in support of a wage pass-through proposal which seeks to ensure that each nursing home resident will be compassionately served by that "someone" envisioned in the
Star Tribune editorial.

We appreciate your consideration and look forward to working with you on this proposal.


Addressing the Nursing Facility Labor Crisis:
The Coalition for Quality Nursing Home Care

February 1999

Staff Included in the Wage Pass Through:

  • Direct Care (RNs, LPNs and Certified Nursing Assistants)
  • Support Service (Maintenance, Housekeeping, Laundry and Dietary Staff)
  • Administration (Excludes Administrator and home office staff)

Wage Pass Through Funds Can Be Used For:
  • Wage Increases
  • Staff Increases
  • Fringe Benefits (Includes: Health, Life and dental insurance and retirement) -- Can be used for an increase in existing benefits or for funding a new benefit.
  • Offset Nursing Home Rate Cuts (see below)

Application Process:  Nursing facility would have to submit a letter to the Bureau of Health Care Financing (BHCF) in the Department of Health and Family Services, indicating it wishes to receive a "wage-pass-through add-on" to their 7/1/99 Medicaid rates.

Reconciliation:  The BHCF would do a reconciliation by comparing the facility's Medicaid 1999 fiscal year cost report to the Medicaid 1998 fiscal year cost report to determine if increases in wage, staffing and/or fringe benefits were at least equal to the wage pass through add-on.  Failure to expend the wage-pass-through funds for their intended purpose would result in the recoupment of those funds by the BHCF.

Medicaid Reimbursement Formula and Wage-pass-through Adjustments

The inflationary increase funds contained in SB 45/AB 133 would be used to fund a "cost to continue" formula. If these funds are inadequate, some nursing homes may receive a rate cut. If a facility receives a rate cut and is not reimbursed for all of their allowable costs, the facility can still receive the wage-pass-through.  For example, a facility receives a 3% rate cut.  This facility would only have to increase wages, staffing and/or benefits by a total of 4% in 1999 and would still be eligible for the 7% wage-pass-through add-on.  The facility would not be required to increase labor costs beyond the net of the formula and wage-pass-through adjustments.

Preliminary Fiscal Estimate: 

Coalition for Qualitiy Nursing Home Care
Wage Pass-Through
February, 1999


FTE's per 100 Residents

FTE's 44,600 Residents

Annual Hours

7% Increase

Total Cost

1997 Ave. Wage

7% Increase

Registered Nurses




$ 1.22

$ 12,414,770


$ 1.22

Licensed Practical Nurses




$ 0.90

$ 6,513,761


$ 0.90

Nursing Assistants




$ 0.58

$ 21,719,289

$ 8.32

$ 0.58

Certified Medication Aides




$ 0.63

$ 290,271

$ 8.94

$ 0.63

Activity Directors/Staff




$ 0.64

$ 1,905,529

$ 9.17

$ 0.64

Recreation Therapists




$ 0.64

$ 119,096

$ 9.17

$ 0.64

Social Workers




$ 0.88

$ 1,395,379


$ 0.88





$ 0.88

$ 164,162


$ 0.88

Dieticians & Food Workers




$ 0.57

$ 6,011,144

$ 8.12

$ 0.57

Other Non-Technical Staff (14.5)

  • Maintenance




$ 0.77

$ 2,079,042


$ 0.77

  • Housekeeping




$ 0.53

$ 3,583,776

$ 7.56

$ 0.53

  • Laundry




$ 0.53

$ 2,099,822

$ 7.52

$ 0.53

Other Health Prof./Tech. Staff




$ 0.73

$ 1,771,108


$ 0.73

Medical Records




$ 0.63

$ 638,596

$ 8.94

$ 0.63







$ 60,705,746


Medicaid Percentage




Medicaid Cost


$ 41,279,908


(There was a newspaper article titled "Nursing Homes: Workers deserve a pay raise" (Minneapolis Star Tribune, editorial, Tuesday, March 10, 1998), attached to this issue paper. If you would like a copy of this article, please call Deborah Phillippi at the WAHSA office (608) 255-7060, or please click and e-mail your specific request to the WAHSA office.

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