North Shore Health seeks legislative change to reclassify swing bed stays; committee lays bill over

North Shore Health in Grand Marais asked the Health Finance and Policy Committee on Wednesday to approve a narrow legislative fix that would allow the facility to reclassify part of its nursing home as hospital swing‑bed care to increase Medicaid reimbursement.

Rob Sponheim (identified in testimony as Rob Scribe) presented the bill and introduced Kimber Raulstead, CEO and administrator of North Shore Health, who described chronic operating losses at the hospital‑affiliated nursing home. Raulstead told the committee the nursing home has lost an average of about $1,500,000 a year over the last 20 years and posted a loss of more than $2,000,000 in the current year despite an almost $1,900,000 property tax levy.

Raulstead asked lawmakers to allow the facility to reclassify roughly one half of its nursing home as hospital beds on paper so Medicaid could reimburse those residents at the state swing‑bed hospital rate (testimony cited $299 per day) instead of the nursing‑home case‑mix rate (testimony cited a current low of $366.27 per day). Raulstead said the change would be a reclassification on paper only and would not change patient care or locations; she said the proposal would have no cost to the state because the hospital would provide the non‑federal share by assessment or other means.

Members inquired about federal authority and implementation. Representative Scott Biermann asked whether the federal Centers for Medicare & Medicaid Services (CMS) and the Department of Human Services (DHS) would need to be involved. Elise Bailey, DHS budget director, said the proposal would require further work with the author and DHS to define rate methodology and would require federal approval. Bailey also said DHS staff and the department of health are working with the hospital on technical aspects but that a pending meeting with CMS would not occur in time for the hearing.

Raulstead told lawmakers that without a change, the nursing home and some services may be unsustainable; closing the facility would force residents to leave the county and travel two hours or more to visit family. She described a recent resident from the Grand Portage Band of Chippewa who relied on community visitors and would have been isolated if forced to leave the area.

Committee members asked clarifying questions about bed counts and operations. Raulstead said North Shore Health has 37 licensed nursing‑home beds and a 16‑bed critical access hospital. Representative Biermann noted the likely need for a federal waiver or approval; others said they had discussed similar approaches with CMS and that other states — including North Dakota, Hawaii, Kansas and Montana — have used related reclassification mechanisms.

After questions from members, Representative Rob Sponheim asked for a favorable vote to advance the concept. The chair laid House File 19‑12 over for possible inclusion in the omnibus bill.

Why it matters: North Shore Health is the only skilled nursing facility in Cook County and supports hospital, emergency and ambulance services for a remote community. Supporters say a narrowly tailored reimbursement change would preserve local access to long‑term care and related services without increasing state general‑fund costs; DHS said federal approval will likely be required.

No final implementation plan was adopted; DHS agreed to continue working with the author and the facility on details and federal coordination.