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Providers warn 2025 cuts and wage caps threaten long‑term care stability
Summary
Long‑term care and disability service providers told the House Human Services committee that 2025 legislation — including caps on rate increases and changes to waiver and rate‑adjustment rules — has forced delayed investments, anticipated reductions in resident services and risks a fiscal ‘‘cliff’’ for nursing facilities and disability supports over coming years.
Long‑term care providers and disability service advocates told the House Human Services Finance and Policy Committee that policy changes enacted in 2025 are straining provider finances, threatening staff retention and risking service reductions for seniors and people with disabilities.
Kyle Burnt of CARE Fighters Minnesota summarized a provider survey showing partial workforce recovery since the pandemic but continuing shortfalls: ‘‘We do still have about 11,000 statewide vacancies,’’ he told the committee. He said legislative changes that capped nursing facility rate increases at the lesser of 4% or CPI, combined with a sector minimum‑wage add‑on, are producing wage‑compression and will force many providers to delay infrastructure investment and cut non‑staffing resident services.
Presenters said some nursing facilities that increased wages in 2024 now face lower rates in 2026 because rate settings reflect earlier cost reports and the new cap. They warned that many facilities and assisted‑living providers plan to reduce discretionary resident services (activities, nonessential programs) and delay capital projects. One presenter summarized the sector outlook as a possible ‘‘fiscal cliff’’ with an estimated nearly half‑billion‑dollar revenue reduction by 2029 tied to 2025 policy shifts, noting the figure combines fiscal‑note estimates and provider match/private‑pay impacts.
Khan Vance, director of research, analysis and policy at ARM, described disability waiver impacts, saying direct support professional turnover reached about 51.5% in 2024 and average DSP wages reported in member surveys were roughly $18.36 — below a livable wage. Vance said recent statutory changes moved rate adjustments from BLS‑based data to CPI‑based indexing and added restrictions on rate exceptions, reducing providers’ ability to secure higher reimbursements for complex cases.
Several witnesses described implementation timing concerns: rate add‑ons tied to the nursing home wage mandate may not be available to providers until 30 days after CMS approval of state plan amendments; some providers have already increased wages without retroactive reimbursement pending CMS action.
A family guardian testified that changes to individualized home supports (moving from a daily rate to 15‑minute units for some license types) and a freeze on certain provider licensing options threaten continuity of care for people living independently.
Committee members requested follow‑up detail on survey methods, county processing times for Medicaid applications, sources for revenue‑loss estimates, and the status of pending state plan and waiver amendments at CMS. Providers and associations said they will supply supporting data and county‑level processing numbers to the committee.
The session concluded with lawmakers and providers noting the human and service impacts of the funding changes and the importance of timely CMS approvals for planned wage and rate adjustments.
