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Health care taxation reform

The retirement communities created by Erickson are equipped with amenities that enable residents to live a happy and fulfilling life at any age beyond retirement. To ensure this, communities are structured to adapt to the evolving requirements of residents by offering different housing plans and assisted living options.

 

The Challenge

Retirement communities, such as Fox Run, offer many healthcare services to appropriately cater to residents’ care needs. As a result, such facilities fall under the category of Continuing Care Retirement Communities (CCRC). When the state government rolled out plans to assign new Medicaid taxes to hospitals and similar institutions, CCRCs were on the list of establishments to be included. With this fee, institutions would have to pay a percentage of their total revenue to the state, calculated based on the number of beds on premises. This would then be matched by the federal government in order to help expand the state’s Medicaid program, which is why it became known as the Medicaid bed tax. Once information was released about the types of institutions that were set to be taxed, Erickson knew it would have to fight to be excluded based on the fact that its communities are far different from hospitals. 

In the beginning, Erickson set out to initiate conversations in Lansing to voice an argument for the exclusion of CCRCs from the new tax but weren’t able to connect with the right people to make progress. It was then that Erickson sought out expert assistance to expedite the process. When evaluating partners, MLC’s deep-seated relationships and extensive understanding of the Capitol environment significantly contributed to Erickson’s decision to work with the firm.

 

The Solution

MLC identified key areas of focus that would be crucial for the success of this program. First and foremost, a detailed comparison of CCRCs and other health care institutions helped raise awareness of the need for separation of taxing. For example, clarifying that Fox Run’s residents utilize Medicaid at a very low rate, if ever, shows that a Medicaid bed tax is not applicable to this health care institution. Secondly, having MLC professionals with strong connections on the ground to represent Erickson, including 12-year Michigan legislative veteran Brendan Ringlever, was a big asset for the client. MLC’s advocacy efforts to educate strategically selected House and Senate Appropriations Committees, key legislators, and state departments, such as the Department of Insurance and Financial Services, significantly impacted the outcome of this case. 

 

The Results

The reclassification of CCRCs convinced legislation to omit Erickson’s Fox Run community from being included in the Medicaid bed tax—resulting in roughly $1 million in savings annually. Not only Erickson but the whole CCRC industry continues to save millions of dollars in Michigan as a result of MLC’s work on this case. In fact, because Erickson has facilities throughout the US and encountered similar problems in other regions, the positive outcome in Michigan became a national model of success for the company to present in other states. 

For more information on how MLC can help shape Michigan legislation to benefit your organization and industry, reach out here.

The reclassification of CCRCs convinced legislation to omit Erickson’s Fox Run community from being included in the Medicaid bed tax—resulting in roughly $1 million in savings annually. Not only Erickson but the whole CCRC industry continues to save millions of dollars in Michigan as a result of MLC’s work on this case.
- Brendan Ringlever