Nursing homes propose tax on own gross receipts

Thursday, Dec. 26, 2002 | 11:06 a.m.

CARSON CITY -- While most big business in Nevada is scurrying to avoid new taxes, the nursing home industry is proposing to tax its gross receipts by 6 percent.

This isn't a philanthropic gesture to help out the foundering state budget. It's a plan by the estimated 40 free-standing care centers in Nevada to use the tax receipts to tap an additional $6 million a year from the federal government in Medicaid payments.

"This is a helluva way to run a railroad," said Charles Perry, executive director of the Nevada Health Care Association. But he said it's necessary because the state doesn't have the money to reimburse the homes for the care of Medicaid patients.

Because the Medicaid program uses matching federal money, the $6 million raised by a 6 percent tax on gross nursing homes' revenue would yield more than that in federal money, Perry said.

The tax would permit the nursing homes "to break even" on Medicaid patients under the state formula for reimbursing care centers, said Renny Ashleman, a Las Vegas attorney representing nursing homes. At present the state is unable to pay the full rate called for in the formula, he said.

"We have lost several nursing homes (to) bankruptcy and failure," Ashleman said. "We will lose some more if we don't do something."

The state receives 52.39 percent of the actual cost of care from the federal government. That is to rise to 54.93 percent starting in October 2003.

If the Legislature imposed an additional gross receipts tax on business, it would be on top of the 6 percent levied on the nursing homes, Ashleman said.

About 23 states have a similar tax now, he said.

Assemblyman David Goldwater, D-Las Vegas, has asked for a bill to put the tax system into effect.

Perry confirmed that the industry supports the tax on itself because the result would be additional money being returned to the homes.

"Without doing something, the state doesn't stand a prayer to fund this program," Perry said.

Somewhere between 72 percent and 75 percent of the patients in nursing homes are paid for by Medicaid, the federal-state program to help the poor.

Ashleman said the nursing homes and the state have been exchanging information on the tax but there has not been any joint deal.

Marybel Batjer, chief of staff for Gov. Kenny Guinn, said the governor's office would "look very seriously" at the proposed tax plan.

"We have to work very carefully because the health care industry is very fragile," she said, noting that many centers had faced financial difficulties.

The state and the nursing homes have been working for several years to change the rate of reimbursement for patients. A new system is being phased in that would have the state pay for the care, medication, treatment and rehabilitation given the patient, Perry said.

But nursing homes, both under the old system and the new system, are underpaid by about $12 per day per patient by the state, Perry said.

Ashleman said this plan would raise tax-Medicaid money to close the gap. The state would still be responsible for its present support and providing cost-of-living raises. Perry said the tax and the added federal funds would only go to nursing homes and would not "go into the black hole of Medicaid."

The state provided a 20 percent cost-of-living increase in Medicaid to the nursing homes in October 2001 but froze the 4.5 percent raise the homes were scheduled to receive July 1 this year because of the state's financial crisis, Perry said.

The tax would exclude payments being made from Medicare. Some hospitals, such as rural hospitals with nursing home beds, would be exempt because they are paid under a different reimbursement system.