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Some nursing home construction put on hold in Indiana

May 8, 2015
by Lois A. Bowers, Senior Editor
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A three-year partial moratorium on the construction of new nursing homes will go into effect in Indiana, prohibiting some projects through June 2018. Indiana Gov. Mike Pence is allowing SEA 460 to become law without his signature, he said today in a statement, “because, on balance, it serves the interests of Indiana taxpayers and gives industry time to adjust to anticipated changes to long-term care [LTC].”

Previous administrations have enacted similar or more comprehensive moratoriums in 2006, 2007, 2008 and 2011, the governor said. 

“As a strong advocate of free-market economics, I hesitate to support any restriction on commerce, but in an industry that derives 85 percent of its revenue from state and federal sources, we must always consider the impact of our policies on the cost to taxpayers,” Pence said.

The Indiana House of Representatives passed the legislation in March by a 52–40 vote, noting empty beds across the state. “A similar bill failed a year ago following private lobbying by a senior Republican lawmaker whose family business faced losing millions of dollars under a moratorium,” according to the Indianapolis Star. That lawmaker, then-House Speaker Pro Tem Eric Turner, later resigned.

The partial moratorium will not prevent construction of replacement nursing facilities or construction of new nursing facilities in counties where occupancy rates exceed 90 percent, Pence added. Assisted living and independent living facilities will not be affected by the law.

“A three-year pause on new facility construction will give our state and the [LTC] industry the opportunity to achieve a better balance between institutional care and home- and community-based services while we engage in a much-needed discussion about reforms to our current Medicaid reimbursement formula,” the governor said.

Only three states rank higher than Indiana in the percentage of Medicaid LTC dollars spent on nursing home care, according to Pence. The state has a 77 percent occupancy rate compared with the national average of 86 percent. A study by the Family and Social Services Administration concluded that, based on the current Medicaid reimbursement formula, a three-year halt to new nursing facility construction will save about $24 million in Medicaid expenses, the governor noted.