PIERRE (AP) – South Dakota lawmakers on Wednesday approved millions of dollars of new funding for nursing homes experiencing a financial crisis that's led to five closures over the last three years.
Advocates say the significant 10 percent inflationary funding increase for nursing homes included in the state budget is a step in the right direction. The Legislature passed the spending plan just days after a facility in Huron announced that it would shut down by May because of a lack of funding.
Mark B. Deak, executive director of the South Dakota Health Care Association, said the rate of closures has "accelerated dramatically" because of underfunding Medicaid reimbursements. But the new inflationary increase will hopefully prevent some potential nursing home closures, he said.
"When you see this happening around the state, I would say that's a big crisis. It certainly is for the communities that it happens in," Deak said. "I think it really comes down to will. Do we have the will to make caring for our elderly a priority for us?"
The Huron nursing home will be the sixth in the state to shut down in roughly three years, following closures in Madison, Mobridge, Tripp, Bryant and Rosholt, according to the association. South Dakota has about 100 nursing homes that care for a total of roughly 6,500 people, Deak said.
He credited lawmakers and Republican Gov. Kristi Noem for taking a "very good step," but he said advocates plan to keep pushing for future increases. The current gap between the cost of caring for people and the rate of Medicaid funding is about $58 per recipient each day, a shortfall of about $66 million annually, Deak said. The South Dakota Association of Healthcare Organizations pegs the shortfall at about $42 million per year.
The new money will fill in roughly one-third of the disparity between state support for care and the cost of providing it to Medicaid recipients at Jenkins Living Center in Watertown, said President and CEO Loren Diekman. It's the largest single boost Diekman said he can remember during his roughly three decades at the facility.
The funding will help the Jenkins facility purchase equipment and allow it to invest in staff to help draw and retain workers, Diekman said.
"This is truly a blessing in so many ways compared to what we've received in previous years," he said.
Sen. John Wiik, co-chair of the Joint Committee on Appropriations, told his colleagues early Wednesday that he talked to every senator he could about priorities and that all of them said lawmakers needed to find a solution for nursing homes.
"Is that going to solve the problem entirely? No. But it's a good start, and it's a good step," Wiik said of the inflationary hikes.
Lawmakers approved bigger funding increases than Noem originally suggested for health care providers in her January budget address. Those include a 6.5 percent hike for community support providers, who help people with intellectual or developmental disabilities live independently in their communities, and the 10 percent increase for nursing homes.
Noem said it's great that the Legislature ended up with a larger hike for nursing homes.
"I'm sure with the 10 percent that they recognize this will be a big shot in the arm to be able to keep some facilities open," the governor said, adding that she was thrilled lawmakers supported her push to fund $5 million in nursing home innovation grants.
She called the increases for nursing homes and community support providers "urgent priorities." The new money is likely among the most positive steps that the Community Support Providers of South Dakota has seen in the last decade to address Medicaid rates, said the association's executive director, Dan Cross.
But Cross said it's not quite a full solution. South Dakota's average Medicaid funding per participant is $15,800 lower than the national average, according to 2015 data from the State of the States in Intellectual and Developmental Disabilities Project.
Community support providers are facing similar problems as nursing homes, including at least four group home closures in the last two years, he said. Cross added that he expected the funding increase to go toward pay increases and operational costs across the state's 20 community support providers that serve about 4,500 people and employ more than 3,000 direct care staff.
Community support providers have been trying to stabilize their workforce to reduce annual turnover that's nearing 50 percent. The average pay for direct care workers is $12.51 per hour, but the closer they could get to $15 an hour the better, Cross said.
"We really want to get those wages up so that we can get them more toward a living wage," he said.
The overall $4.9 billion state spending plan that lawmakers approved early Wednesday includes 2.5 percent increases for education and state workers. The budget includes roughly $1.7 billion in general state spending, about $59 million over the current budget year.
The budget calls for spending roughly $1.8 billion in federal funds and $1.4 billion in other state money such as highway funding.
Lawmakers this session also reshaped the current year's budget to add funding to allow health care provider raises to start April 1. The bills are headed to Noem for her signature.