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Legislators say they weren't notified of hike in nursing home reimbursements

PIERRE — The state Department of Social Services decided it could increase Medicaid reimbursement rates to nursing homes by 4 percent this summer, on top of the 3 percent raise that the Legislature approved last winter.

Several legislators made clear Monday they weren't pleased that the state department didn't tell them before notifying nursing homes about the extra 4 percent.

The 4 percent will cost an estimated $2.5 million of state general funds and about $5.3 million from all sources of government revenue, according to state Social Services Secretary Lynne Valenti.

Valenti discussed the matter Monday with members of the Legislature's Joint Committee on Appropriations that oversees state budget matters.

Valenti didn't tell legislators during the 2014 session last winter that an extra increase was planned.

She said reimbursement rates are routinely reviewed every spring after the session is complete and before the department submits its budget request to the governor for review in August.

Nursing homes have been running about 150 Medicaid patients below expected levels in recent years. Because the money was already appropriated by the Legislature, giving the additional 4 percent won't cost any more than was budgeted, Valenti said.

"We've seen this trend in reduced beds for the past couple of years at least, but we didn't make the adjustment until this year because we wanted to make sure it wasn't just a blip," Valenti said.

"We feel confident that this utilization trend will continue and we have the funds in our budget to support this area," she continued.

The nursing facilities need to stay open, Sen. Deb Peters, R-Hartford, said. "It's a specific target," Peters said.

Sen. Phyllis Heinemann, R-Sioux Falls, asked for the reason for the trend of fewer people than expected.

Valenti replied there are more community services, more community-based providers and people are receiving community services longer rather than moving into nursing homes.

"The utilization is down in both Medicaid and private pay," Valenti said.

There are approximately 8,000 nursing beds and the average Medicaid occupancy rate is 57 percent.

Rep. Susan Wismer, D-Britton, told Valenti she was "puzzled" why the Legislature wasn't briefed about the possibility of the extra 4 percent during the 2014 session that ended in March.

"The decision was made well after session," Valenti responded. "This was an example of an area where we used the appropriated funds."

Peters called the $2.5 million "a fair sum... not a lot of money but to the person on the street a lot of money" and then asked, "What changed?"

Valenti replied, "I would say it's a timing issue."

Sen. Bill Van Gerpen, R-Tyndall, suggested Social Services should have given legislators some information about it. He said nursing homes received word before legislators did.

"I would just like to voice my concern about that," Van Gerpen said.

Peters reinforced the point. "It would have been nice if we had known about it," she said.