Tough Road Ahead for OH Nursing Homes

A recent article in the Columbus Dispatch explained why nursing homes throughout Ohio are in for some difficult times.  A majority of the 958 skilled nursing homes in the buckeye state will have to adjust to an atypically unfavorable state budget over the next two years.  The budget, signed by Governor Ted Strickland on July 17, will enforce an increase in the bed tax on nursing homes.  Industry officials estimate it will cost nursing homes $184 million in the next two years, or $200,000 per home on average.  According to these officials, it will also mark the first time that nursing homes will pay more in fees than what Medicaid reimburses them. 

Some facilities across the state are expected to merge due to cost-constraints, while some are expected to completely close their doors.  The ones that stay open will have to cut costs and most likely will lay off workers, significantly lowering the quality of patient care. 

Medicaid has always favored nursing homes.  In fact, nursing homes are the only provider of Medicaid for which automatic increases in payments are written into law.  However, the miserable economic climate in Ohio won out as the state desperately needs more tax revenue. 

In addition, nursing homes will soon pay a considerably higher franchise fee of $11.95 per bed each day, up from $6.25.  This revenue, expected to be upwards of $760 million, will contribute to federal matching Medicaid funds. 

The article also reported that the increasing amount paid per patient by Medicaid to nursing homes is misleading ($176.42 per patient this year and $176.46 per patient next year), because a total of $9.61 is earmarked to go towards ancillary care and the work force development incentive payment.  This means that although the amount paid by Medicaid to nursing homes will increase $0.04 in the next two years, in reality it will decrease by $9.57 due to the earmarks.  Out of the $9.61, $5.70 will go towards raising wages.  However, most nursing homes feel that raising wages to some comes at the expense of firing other employees.  Some hospitals refuse to use the money in this way.

To read the entire article from The Columbus Dispatch, click here: Nursing homes take a hit

2 Replies to “Tough Road Ahead for OH Nursing Homes

  1. I’ve been interested in taxations for longer then I care to acknowledge, both on the individual side (all my employed lifetime!!) and from a legal standpoint since passing the bar and following up on tax law. I’ve rendered a lot of advice and corrected a lot of wrongs, and I must say that what you’ve posted makes perfect sense. Please uphold the good work – the more people know the better they’ll be equipped to handle with the tax man, and that’s what it’s all about.

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