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CMS proposal would be ‘major financial burden’ for CCRCs

Published on 2/2/2020

CMS proposal would be ‘major financial burden’ for CCRCs


A Centers for Medicare & Medicaid Services regulation effectively proposing new Medicaid taxes could “lead to a major financial burden” for continuing care retirement communities and residents — and even the closure of skilled nursing units within CCRCs — in 18 states, according to the heads of LeadingAge and the National Continuing Care Residents Association, who sent a letter this week to members of Congress in the potentially affected states.


The Medicaid Fiscal Accountability Regulation would disallow longstanding provider tax exemptions and discounts for some CCRCs, also known as life plan communities, despite the fact that the “vast majority” of residents pay for care in CCRCs out-of-pocket, not using Medicare or Medicaid funds, LeadingAge President and CEO Katie Smith Sloan and NaCCRA President Jim Haynes said.


LeadingAge has identified 18 states that currently exempt CCRCs from the tax program or levy a discounted tax on the communities.


CMS announced the so-called MFAR on Nov. 12 “with the intent of promoting financial integrity in state Medicaid programs,” Sloan and Haynes said.



“While we appreciate CMS’ efforts to do so, the MFAR proposal as written does more harm than good and would have dangerous implications for residents and providers of CCRCs,” they added.


Although the exact cost of the new taxes would vary by state and by community, the amount “easily” could reach six or seven figures each year, Sloan and Haynes said. “Thus, the CMS MFAR proposal could lead to a major new financial burden on CCRCs, and older Americans could face higher out-of-pocket costs if those communities were to pass the cost to the consumer via higher entrance fees and/or monthly fees,” they said.


Of greater concern, however, LeadingAge and NaCCRA said, is that CCRCs in the affected states may decide to reduce or do away with their skilled nursing beds rather than incur the additional tax burden, believing that it is not financially sustainable to operate a nursing home within their continuum.


Sloan and Haynes requested that senators and representatives ask CMS to withdraw or revise the proposal “to protect CCRCs and their residents.”


According to LeadingAge, the 13 states with nursing home provider taxes that exempt CCRCs are Arizona, California, Colorado, Connecticut, Florida, Georgia, Indiana, Maryland, Michigan, Nebraska, New Jersey, North Carolina and Washington. The five states with nursing home provider taxes that discount the tax rate for CCRCs are Iowa, Kansas, Massachusetts, Oklahoma and Pennsylvania.


The rule was published in the Federal Register on Nov. 18. Public comments originally were due Jan. 20, but CMS has extended the deadline to Feb. 1. LeadingAge and the American Health Care Association / National Center for Assisted Living were among the organizations that requested the extension.