February 22nd, 2004 - WISCONSIN HEALTH CARE PROVIDER UPDATE

Not-For-Profit Housing Providers and The Fight to Reinstate Property Tax Exempt Status
On November 19, 2003 the Wisconsin Supreme Court made a final ruling on the Columbus Park Housing Corp. vs. City of Kenosha case, which has had a significant impact on the property tax exempt status of not-for-profit housing providers throughout Wisconsin. Essentially, the Wisconsin Supreme Court has ruled that if a not-for-profit housing provider leases property, that housing facility could be subject to paying property taxes. However, the Court did state that not-for-profit nursing homes and continuing care facilities that charge fees are not affected by this decision: “both nursing homes and continuing care facilities charge fees for the primary and dominant purpose of the provision of services. Residents in these facilities would not constitute “lessees” for the purposes of Stat.70.11, as there is no “lease” in existence.”

This decision by the Supreme Court has sent shock waves through the not-for-profit housing industry. Many providers now face the prospect of having to pay property taxes this year, unless legislation can be passed and signed into law before the session ends on March 11. The Court’s decision could force many not-for-profit housing providers into bankruptcy.

Several organizations and individual providers have been lobbying the legislature, the Governor’s administration and the Wisconsin Housing and Economic Development Authority (WHEDA) to pass legislation to fix this situation. There are many proposals being floated around the Capitol that call for “grandfathering” providers that existed before the Supreme Court decision; call for the creation of income and asset tests (limits); and\or provide for a sunset of any grandfather clause and require that a government led taskforce introduce and pass legislation in the next session to deal with this situation.

At this time a “sunset date” seems less likely, due in part that a “sunset” would interfere with the ability of WHEDA and housing providers from accessing bonding for these type of projects. Although income or asset tests are being looked at, many believe the current proposals are too complicated or inaccurate, and that more time may be needed to structure a working income/asset test.

The Residential Services Association Wisconsin and its lobbyist, Forbes McIntosh, are working with other long-term care associations and individual housing providers as a coalition to pass legislation on this issue by March 11. It is our intent to seek a pure “return the law back to how it was interpreted before the Supreme Court ruling of last November”. Since cities and municipalities oppose this type of legislation without an income test or a sunset provision, this issue will be contentious over the next three weeks.

As details of the legislation are made available, updates will be provided.

Wisconsin Medicaid Hole: MA Cuts Could be Coming
The debate over the $400 million shortfall and whether the state should employ Governor Doyle’s proposal to access $175 million from a bond restructuring effort continues. One deadline of February 11th has passed and another deadline has been set for when the bond-restructuring proposal must pass the legislature. This deadlock has both the legislature and the Governor’s office talking about how the deficit could be dealt with if bond restructuring is not used. The Governor’s office is expected to announce in the coming days that beginning July 1, 2004 Medicaid provider cuts and payment delays may have to be implemented to start budgeting for the $400 million Medicaid budget shortfall. The bonding issue and the Medicaid shortfall are sure to heat up over the next three weeks, since the legislature is scheduled to resume the legislative session on Tuesday, February 25th. Although the 2003-04 legislative session will officially end on March 11th, there is talk of extending the session or instituting a special session to deal with healthcare policy and financing issues.

Hearing Held on AB 644, New Fees on RCACs and Access to RCACs by BOALTC Ombudsmen.
The Assembly Committee on Aging and Long-Term Care held a public hearing on Assembly Bill 644, which would allow BOALTC ombudsmen access to RCAC tenants and buildings. In addition the bill would establish a $12 annual fee on each occupied apartment to pay for the ombudsman position. If the bill were to become law, RCACs would be the first provider to be taxed or assessed to pay for BOALTC ombudsmen positions. In addition, the bill would define RCACs as “health facilities”, which would represent a significant change from the original intent that RCACs be true independent apartments for elderly and disabled tenants. The committee did not vote on the bill and passage is considered unlikely this session. The Residential Services Association of Wisconsin an other Assisted living providers registerd in opposition to the bill, while the BOALTC, AARP and CWAG registered in support of the bill.