Wave of Nursing Home Closures Prompts Relaxed Bed Distribution Rules in SD

In the wake of multiple skilled nursing facility closures in the state, legislators in South Dakota on Monday moved to relax rules that govern the process of redistributing licensed nursing home beds.

The Jamestown Sun first reported the news.

The Interim Rules Review Committee of the Legislature voted unanimously in favor of the changes, which ease restrictions on the transfer of available bed licenses to new operators. Prior to the move, skilled nursing facilities had to submit documentation — including audits and community support letters — to obtain additional beds, the Sun noted.

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In fact, due to a 1988 moratorium on nursing home construction, the Mount Rushmore State went around three decades without SNF construction, until a new development opened in 2017.

Legislators felt the moratorium, which was enacted at the same time that South Dakota repealed its certificate of need (CON) requirements, was necessary to control increasing long-term care costs for the state, Tom Martinec, deputy secretary at the state’s Department of Health (DOH), told Skilled Nursing News at the time.

The redistribution process arose from a shift in population centers that resulted in a lack of SNF beds where they were needed, he explained.

“In 2012 the state implemented a mechanism to redistribute unused beds to identified areas of need through the statutory Request for Proposals (RFP) process,” Martinec wrote. “This was a measure that was intended to incorporate some flexibility into the moratorium.”

The bed redistribution process in South Dakota involved facilities bidding for unused beds, which included ones from facilities that had closed since 2005 — as well as beds that were voluntarily relinquished by facilities participating in the Access Critical Program, which helps South Dakota’s rural hospitals in the changing health care environment. There were some restrictions; beds could only be moved within 15 miles, for instance.

On Monday, Martinec told the committee that though the process had appeared to work since its 2012 implementation, it had recently led to complications and confusion amid the SNF industry’s struggles, the Sun reported. Several facilities in the state have closed, with The New York Times doing a deep dive on the impact of the shuttering of one of the facilities.

Industry leaders in the state pointed to the challenges of low Medicaid reimbursement; the sudden implosion of the Wood Ridge, N.J.-based Skyline Healthcare, which operated 19 facilities in South Dakota, also contributed to the state’s SNF issues.

As a result, the DOH has a pool of 400 beds that have yet to be distributed, with lawmakers hoping that the rule changes will create an easier path for existing operators to increase their capacity, Martinec told legislators.

The legislators were in favor, and state Sen. Lance Russell described the old regulations as “arbitrary,” the Sun reported.

“We’re so interested in turning over this type of authority to the executive branch so we don’t have to make a decision and we create a crisis situation,” he said, referring to the closure of facilities in the state. “All of a sudden, it becomes an emergency that we have to allocate an exorbitant amount of money to solve.”

Mark Deak, the executive director of the nursing home trade group South Dakota Health Care Association, stressed in a statement provided to SNN that the primary cause of the closures is the shortfall in Medicaid reimbursement.

“Until providers are reimbursed at adequate levels, the threat of more closures will remain,” Deak said in the statement. “Even after recent increases in reimbursement, providers still lose an average of $42.33 for each Medicaid resident per day of care. Statewide, costs of unreimbursed care total more than $48 million annually.”

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