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Medicaid cut amounts to elderly tax, official says

Norma Jenks, a nurse at Avera Brady Assisted Living Center in Mitchell, talks with Larry Milbrandt on Thursday afternoon in Milbrandt's room while he watches "Let's Make a Deal." Veronnica Smith, the administrator of the facility, said the proposed 10 percent cut to the state's portion of Medicaid funding would have a severely negative impact on the elderly in long-term care. (Chris Huber/Republic)

A local elderly care official thinks proposed state cuts to Medicaid funding will adversely affect long-term care and amount to a tax on the elderly.

Veronnica Smith, administrator of Avera Brady Health and Rehab and Avera Brady Assisted Living in Mitchell, said she understands Gov. Dennis Daugaard's budget reduction goals. But she thinks the proposed across-the-board cuts of at least 10 percent to all state programs would disproportionately affect the elderly in long-term care programs, and force nursing home providers to make up budget shortfalls by charging higher rates to private-pay patients.

"The governor is making a goal of having no new taxes, but anybody in a private-pay program would be getting double-taxed, and that's not fair," Smith said.

In January, Smith was on hand during Daugaard's public budget presentation in Mitchell. She and others heard the governor plead his case for 10 percent cuts. He said the cuts, which amount to $127 million, are necessary to eliminate the state's structural deficit.

Smith believes some agencies might be able to manage such cuts for one year.

"My only concern is, what's going to happen at the end of the year?" she said.

Smith said Daugaard had no immediate reply when she posed that question during his Mitchell visit.

"It's a huge problem," she said. "I don't believe we're ready to take care of all the (Medicaid-funded) people that need to be taken care of."

Smith does not want to cut salaries or staff, or do anything to jeopardize the level of care her staff has worked to attain.

"I don't know how we'll weather the storm," she said.

Nursing care is not the only program that would be affected by cuts to Medicaid, a state and federally funded program that provides health-care for people with low incomes and certain other needs.

LifeQuest CEO Daryl Kilstrom told lawmakers at a Jan. 29 cracker barrel discussion in Mitchell that a 10 percent cut in state funding would cost his nonprofit agency $674,000. LifeQuest, which assists developmentally disabled individuals, has already cut staff and reduced retirement benefits in recent years, Kilstrom said.

Mark Deak, executive director for the South Dakota Health Care Association, a nursing-home trade association that represents both for-profit and not-for-profit nursing care providers, said the gap between the costs of care and what Medicaid pays providers is widening.

The association claims the state's Medicaid program already underfunds the cost of skilled nursing care by more than $20 million a year. Deak said further cuts would be "catastrophic."

A December report developed by the Eljay Corporation on behalf of the American Health Care Association claims South Dakota was projected to be underfunded by $15.39 per Medicaid patient per day.

Deak said Medicaid funding has been frozen for the past two years, and a 10 percent cut would only increase provider costs for skilled nursing and rehabilitation care. Nursing homes in South Dakota employ an estimated 7,432 people. According to Deak's association, the total and indirect economic impact resulting from those jobs is an estimated $830.8 million.

"The drying up of federal dollars is increasing demands on the state's matching side of Medicaid," Deak said.

Brad Molgard, vice president of operations for Mission Health Care, a for-profit corporation that operates Firesteel Health Care Center in Mitchell and nursing homes in Britton, Rapid City, Spearfish and Belle Fourche, said any cut would reduce the amount of matching funds to nursing homes.

"We have a lot of concern about the possible cuts. Another 10 percent reduction would be pretty devastating," he said.

Smith said about half of Avera Brady nursing home patients are on Medicaid, but in some South Dakota facilities, as many as 75 percent of patients are on the program.

Fewer Medicaid beds are made available for assisted-living patients. Avera Brady makes 30 beds available for assisted-living residents, but only four beds are made available for residents on Medicaid. Countryside Living, which serves independent and assisted-living residents, accepts no Medicaid residents.

Smith said a 10 percent funding cut means she would have to evaluate whether her agency could sustain even the current, modest number of assisted-living Medicaid slots.

Without limited assisted-living options, affected elderly people could be forced to apply for more expensive long-term nursing care, an option Smith said would cost the state more.

"It would not be an economical decision," she said.