North Shore Health seeks swing-bed reclassification to boost Medicare reimbursement
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Summary
North Shore Health, a small hospital district in Cook County, asked the Minnesota Senate HHS Finance and Policy Committee to allow reclassification of part of its nursing-home beds as hospital swing beds to increase Medicare reimbursement and avoid closure of local skilled nursing services; committee laid the bill over for a fiscal note.
Senator Hauschild introduced Senate File 1861 on behalf of North Shore Health, a small health system in Cook County, asking the committee to modify hospital swing-bed licensing and reimbursement rules so the health system can increase Medicare payments and reduce operating losses.
North Shore Health CEO Kimber Rolstead told the committee the organization comprises a 16‑bed critical access hospital, a 37‑bed skilled nursing facility, a home‑health agency and an ambulance service, all in Grand Marais. Rolstead said the facility’s nursing home has averaged annual losses of about $1.5 million over the past 20 years and lost more than $2 million this year. “The ability of North Shore Health to maintain these losses is not sustainable,” she said.
Rolstead described how accounting and reimbursement rules currently require hospitals that operate attached nursing homes to allocate costs under Medicare hospital cost‑report rules, which can move costs into the nursing‑home cost center where state limits and Medicaid rules prevent recovery. She said that in 2025 their “nursing home other operating costs exceed the operating per diem limit by $74 per resident day,” and that the requested change would allow Medicaid reimbursement for swing‑bed care in the hospital at the $299 state swing‑bed rate per day rather than the current nursing‑home case‑mix rates. Rolstead said that the change would not increase state costs: “There will be no cost to the state of Minnesota.”
Rolstead said North Shore Health’s intent is to reclassify roughly half of the nursing‑home beds on paper as hospital beds so Medicaid‑covered residents would be reimbursed under the hospital swing‑bed rate; she described the shift as a paperwork and billing change rather than a change in patient care or location. She told senators the next nearest nursing home is about 60 miles away and the closest hospital more than 80 miles away, and that closure of the nursing home would force residents to leave their community and dramatically increase family travel burdens.
Senators on the panel expressed sympathy and concern for rural health providers and the challenges of highly regulated reimbursement rules. Chair Wicklund said the committee will confirm a fiscal note and laid Senate File 1861 over for further consideration.
The committee did not take a final vote on the bill during the hearing; the measure was laid over pending a fiscal note.