CHANGE IS IMPERATIVE 2011

1. CHANGE IS IMPERATIVE 2011 Rate equalization prevents individuals from paying for the true cost of care – even when they can afford to do so – leaving less money available for those who truly need it. FACT: Repealing rate equalization is a crucial step towards reforming the way we pay for long-term care. FACT CARD 2: RATE EQUALIZATION • What is rate equalization and why should it be repealed? • Rate equalization is a state law enacted in 1976 that requires nursing homes in Minnesota that participate in the Medicaid program to charge the same rates to private payors as they do to Medicaid. • Although rate equalization sounds like a fair and reasonable concept, (i.e., everyone pays the same rate for their care) Medicaid hasn’t kept up with the actual cost of care, which means that no one pays for the full cost of their care. • Currently, Medicaid underpays the true cost of care by nearly $25 a day per resident, which is a 20% increase from that projected in FY 09 ($20.31). As a result of underfunding the Medicaid program, the effect of equalization is that the government is mandating providers charge a rate that is significantly below cost, even to those that can afford to pay for the cost of their care. Projected 2010 Shortfall Between Medicaid Reimbursement and Allowable Medicaid Costs1 Minnesota vs. North Dakota CHANGE IS IMPERATIVE 2011

2. FACT: Rate equalization is a barrier to long-term care financing reform. Declining Length of Stay in Minnesota Nursing Homes2 • Rate equalization creates a disincentive for individuals to plan for their future needs. • Everyone has a responsibility to pay what they can toward their own health care and housing needs. • Rate equalization prevents individuals from paying for the true cost of their care – even when they can afford to do so – leaving less money available for those who truly need it. • Rate equalization limits the available private pay options, taking choices away from seniors and their families. • Combining the repeal of rate equalization with other financing reform measures will help individuals be more responsible in planning for their own long-term care needs. • Repeal of rate equalization allows private pay rates to reflect local economic realities. • We must reform long-term care financing to reflect today’s reality and meet the needs of the future. • Federal law ensures that providers cannot discriminate against an individual based upon the payor source, which means there cannot be a difference in quality of care based on Medicaid or private pay. • Lengths of stays in nursing homes have changed dramatically since rate equalization became law in 1976. Individuals are now much more likely to have a short stay in a nursing home which means the risk of spending down assets will be minimized. About The Long-Term Care Imperative The Long-Term Care Imperative is a collaborative effort between Care Providers of Minnesota and Aging Services of Minnesota, the state’s two long-term care provider associations. Our goal is to advance a shared vision and future for older adult housing, health care, and supportive services. • DATA SOURCES: • Information and data on shortfalls in Medicaid funding based on report prepared by Eljay LLC for the American Health Care Association • Minnesota Department of Health CHANGE IS IMPERATIVE 2011 FACT CARD 2: RATE EQUALIZATION