Quartet of nursing homes could see modified property rate increases

Timing is everything.

For three nursing homes in Minnesota, they got caught on the wrong side of calendar.

If nursing home officials want to make improvements to their facility, they can go through a moratorium exemption process where plans are submitted for approval by a Health Department committee. If approved and completed, the facility’s property rates are increased to cover the cost of those projects.

Nursing homes in Duluth, St. Paul and Chatfield went through the moratorium exception process in 2018 and 2019. When the Legislature changed the process in 2020, it affected those three nursing homes.

“We are nonprofit nursing homes that were affected by just some timing issues with the moratorium exception process,” said Chester Fishel, administrator for Viewcrest Health Center in Duluth. “We were put under the old rate system for this process and it's significantly less financially feasible. If our projects would have been approved after 2020 our rates would have been a lot more to cover these costs.”

HF702, sponsored by Rep. Greg Davids (R-Preston), would modify the nursing facility property rate increases by extending the expiration date of the rate increase for those three homes. It would also remove a time-limited property rate increase for a facility located in Fergus Falls.

The House Human Services Finance and Policy Committee laid the bill over Thursday for possible inclusion in a later bill.

A nursing facility’s property rate is set according to the previous “contract-based” or “alternative payment system.” Under that system, a facility agrees to be reimbursed at a rate established in a contract between the facility and the department.

A nursing facility that completes a moratorium exception project that is authorized after March 1, 2020, receives a property rate using the fair rental value property rate methodology beginning the first day of the first month of the calendar quarter after the completion of the project.

“It's not like we're opening up the whole gate to everybody. It's just these three kind of got caught in the middle,” said Davids.

As of Feb. 28, 2025, 25 nursing facilities have had moratorium exception projects approved under the fair rental value property rate methodology and are moving ahead with the approved project. Nine facilities are reimbursed under the fair rental value property rate.