Message to the Membership from Debra

Over the past few months, thousands of KAHSA member CEOs, administrators, board members, employees, residents, family members and other friends made time to repeatedly phone, write and/or email legislators…cornered them at Wal-Mart, wrote letters to the editor, brought legislators to their homes to hear first-hand from residents, participated in our press conference, and engaged the media to raise public awareness of our issues.  If not for this unbelievable show of determination we could not have achieved the position of strength the association now holds. 

KAHSA is far stronger today than we were even four months ago. We banded together around a commitment to our elders and we have served them well, maybe not in the way we initially envisioned, but despite tremendous odds we have raised our voices and gained great influence in the legislative process.  Over the past few months we learned new ways to make our voice heard that we will take forward as we advocate for the right policy for the right reasons in years to come.

Later this morning we will announce that we have entered into an acceptable compromise on the nursing home bed tax issue. I wanted you to hear this from me first. I am at peace with our position. I believe this is the best outcome we could have hoped to achieve. The tax was very likely to pass this year or next, and had we continued our position of opposition at all costs, we would have had little or no opportunity to exert any further influence to control damage to private pay residents or to control damage or maximize benefit to our members.  Our board has struggled mightily with this issue over the course of this legislative session.  They have met on nine separate occasions since January. They have been dogged in their determination to do the best thing on behalf of the membership.  

We have achieved a great many things in this compromise that we need to celebrate.  As a result of the unprecedented outpouring of grassroots advocacy by our members and their constituents (and our work in the Statehouse and with media) the Governor met with Board Chair Jim Morford and me, and other stakeholders, last Friday evening to discuss our concerns.  At that meeting he offered a new conceptual model for structuring the tax that he believed would address most of our major reasons for opposition. We received the details of the model early this week. Upon careful analysis we determined that the new model was a significant improvement over the previous model, (i.e. it greatly reduces the number of KAHSA members that would pay more in tax that they would receive in increased Medicaid reimbursement, and the extent of loss for those members is greatly reduced.)  In the last 48 hours we have entered into intense negotiations for additional concessions that go even further toward addressing our primary concerns. We have had much success in those negotiations. 

Here is a summary of those issues and further amendments to address them: 

Issue: The bill as previously written would have created unacceptable pressure on providers to raise private pay rates.
Amendment: Repeal of the requirement that facility private pay rates must be higher than the facility Medicaid rate.

Issue: Cash flow - Lack of assurance that members would not have to pay a large tax amount before they received increase Medicaid payment.
Amendments: Requirement for Medicaid rate increases to begin at least 60 days in advance of the first quarterly tax payment by the provider, plus a provision that calls on the state to arrange for delayed payments by providers who are experiencing financial difficulties.

Issue: The money will be used for purposes other than those outlined in the bill.
Amendments: New provisions were added to abolish the tax if any of the funds are diverted for purposes other than those established in the bill (either through bill amendment or by proviso). In addition, the new bill says that Medicaid rates will be restored to those in effect in December 2009 and none of the funds generated by the bed tax and matching federal funds will be used for that restoration.  In reality, there is no such thing as a “lockbox” that cannot be opened by the Legislature, however these additional amendments reduce the avenues the Legislature can take to change the bill, giving us strategic advantages if we are forced to fight efforts to divert the money in the future.  

Issue: Risk of private profiteering of additional funds generated by the bill.
Amendment: Inclusion of additional language to further clarify that dollars received by providers will be spent in their local facility rather than being distributed to shareholders or for corporate purposes or corporate bonuses.

Issue:  Lack of assurance that if excess funds are generated in years 2 and 3 they will really go toward quality.
Amendment:  After the funds generated by the tax and federal match are used to rebase and pay back the Medicaid portion of the tax, any excess funds will first go toward raising the direct health care cost center cap from 120% to 150% of the median. 

Other favorable provisions that will be retained from the original bill include:

1.    A reduction of the tax to 60% of the first year tax in Year Three and elimination of the tax in Year Four.

2.    Reinstitution of annual rebasing, based on the most current 3 years of cost reports.

3.    Payment of the 10% reduction for January to June of this year.

We have many people to thank for getting us to a position of sufficient strength that we were able to achieve these outcomes. Senator Carolyn McGinn, Representative Marc Rhoades, Representative Ron Worley and Representative Delores Furtado and other legislators persistently and eloquently expressed our concerns to their colleagues.  Capitol Strategies, our top-notch team of lobbyists led by John Peterson and Bill Brady, provided invaluable strategic guidance and on-the-ground support. Our in-house team stayed true to our passion to do the very best we can for our members.

Next Steps:  We will know the final outcome on the bed tax issue in the next few days as the 2010 Legislature wraps up their work.  We will keep you posted on developments. We are not encouraging additional grassroots advocacy against the bill at this time.  Instead, we will remain extremely engaged at the Statehouse to preserve the compromise we have reached.  I encourage you to join us in thanking legislators and others who have helped us in our efforts and to convey to them that they have been part of our ability to achieve the best possible outcome given the circumstances.

If you have questions about this information, please contact us at 1-800-264-5242.