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
FACT CARD 2: RATE EQUALIZATION

money available for those who truly need it.

What is rate equalization and why should it be repealed? Projected 2010 Shortfall Between Medicaid
• Rate equalization is a state law enacted in 1976 that requires nursing Reimbursement and Allowable Medicaid Costs1
homes in Minnesota that participate in the Medicaid program to charge Minnesota vs. North Dakota
the same rates to private payors as they do to Medicaid.
$5.00 $2.36
• Although rate equalization sounds like a fair and reasonable concept,
$0.00
(i.e., everyone pays the same rate for their care) Medicaid hasn’t kept up
($5.00) Minnesota North Dakota U.S. Average
with the actual cost of care, which means that no one pays for the full cost
($10.00)
of their care.
($15.00)
• Currently, Medicaid underpays the true cost of care by nearly $25 a day
($20.00) ($17.33)
per resident, which is a 20% increase from that projected in FY 09
($25.00)
($20.31). As a result of underfunding the Medicaid program, the effect of ($24.70)
($30.00)
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.

CHANGE IS IMPERATIVE 2011

 Rate equalization creates a disincentive for Declining Length of Stay in Minnesota Nursing Homes2
individuals to plan for their future needs. 800
• Everyone has a responsibility to pay what they can toward 700 658 666
634 624
their own health care and housing needs. 583 591
600 542
• Rate equalization prevents individuals from paying for the 517497 502 474 502
true cost of their care – even when they can afford to do so 500
415

Days
377 338
– leaving less money available for those who truly need it. 400
298 322
• Rate equalization limits the available private pay options, 300 268
taking choices away from seniors and their families. 200
• Combining the repeal of rate equalization with other 99 106 93.5 95.5 90.5 84
74.5 70 67.5 65.5 56 41 38 34 32 30 30
100
financing reform measures will help individuals be more 28
0
responsible in planning for their own long-term care needs.
• Repeal of rate equalization allows private pay rates to

90

91

92

93

94

95

96

97

98

99

00

02

03

04

05

06

07

08
19

19

19

19

19

19

19

19

19

19

20

20

20

20

20

20

20

20
reflect local economic realities.
Calendar Year
Mean Median

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.

DATA SOURCES: About The Long-Term Care Imperative

1. Information and data on shortfalls in Medicaid funding based on report prepared by
Eljay LLC for the American Health Care Association
2. Minnesota Department of Health
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.

FACT CARD 2: RATE EQUALIZATION CHANGE IS IMPERATIVE 2011