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Nursing homes emerge as winners in 2020 budget passed by SD Legislature

PIERRE, S.D. -- With a statewide blizzard looming, legislators stayed through Tuesday, March 12 night, into early Wednesday morning, to pass South Dakota’s $4.9 billion Fiscal Year 2020 budget.

Senate Bill 191, the General Appropriations Act, passed the Senate by a 27-2 vote and the House by a 53-6 vote. The Fiscal 2020 budget will go into effect in July.

"In South Dakota, we do these things the right way," said House Majority Whip and co-chair of the Joint Committee on Appropriations Rep. Chris Karr, R-Sioux Falls. "This bill provides a structurally balanced budget for FY 2020 and the ongoing expenses are supported by ongoing revenue."

Nursing homes emerged as the clear winners of budget negotiations. After weeks of discussion among legislators about the state’s nursing home crisis, legislators granted nursing homes the most substantial funding boost percentage-wise.

State Medicaid reimbursement rates for nursing home providers will increase by 10 percent under the approved Fiscal 2020 budget.

Additionally, the Legislature passed Senate Bill 180, amending appropriations for the remainder of Fiscal Year 2019. Thus, nursing homes will start seeing increased reimbursement rates as soon as April.

South Dakota for years has had one of the lowest Medicaid reimbursement rates for nursing homes in the country. For every patient on Medicaid, nursing homes have lost money, not being reimbursed from the state the full cost of care. Over the years, those missing dollars have added up, and nursing homes throughout the state have closed due to the funding gap.

The boost doesn’t close the gap completely. Nursing homes still won’t be reimbursed 100 percent for their Medicaid patients, but they will be closer to full reimbursement.

“Is (the increase) going to solve the problem entirely?” Joint Committee on Appropriations Co-Chair Sen. John Wiik, R-Big Stone City, said on the floor Wednesday. “No, but it’s a good start.”

The legislature’s increase for nursing home funding was more substantial than that Republican Gov. Kristi Noem proposed in her January budget address. She proposed a 5 percent increase in ongoing appropriations to nursing home providers, plus $5 million in one-time funds to partner providers to identify potential alternative care options. The Legislature’s budget also appropriated the $5 million in one-time funds.

Other than nursing homes, Medicaid providers who saw the largest percentage increases in funding were psychiatric residential treatment facilities and community support providers. They saw 8 and 6.5 percent increases in funding, respectively.

Legislators also increased education funding by 2.5 percent to account for inflation, as well as state employee compensation, as Noem previously proposed. They also funded prevention programs proposed by Noem in January to address the state's methamphetamine problem.

In addition to the overall budget, legislators also passed Senate Bill 172, which set aside $500,000 for emergency relief in the case of natural disaster. Karr said the fund anticipates for a “rainy day,” like potential flooding anticipated in the state this spring.