Kettering College fights for millions of Medicare dollars

Tuition could skyrocket unless Congress passes law to grant exemption to school

Kettering College says its students studying for careers in health care will see steep increases in tuition unless lawmakers pass legislation that would allow the school to keep Medicare money, which accounted for more than a third of its revenue last year.

When Kettering College President Nate Brandstater arrives in Washington on Monday, his itinerary includes three days of meetings with 15 congressional offices, including time with recently named U.S. House Speaker Paul Ryan.

Brandstater has made several such trips in recent months.

In 2010, nursing colleges such as Kettering were ordered by their regional accrediting organization to break off from parent hospitals, essentially becoming their own entities. However, per federal law, leaving Kettering Health Network would cause the college to lose Medicare pass-through money, which accounted for more than $7 million of its $20 million in revenue last year.

Kettering Health Network gets reimbursements from Medicare for training nurses — a career field that experts say will experience labor shortages in the near future.

“To capture that loss of funding, it will need to come through tuition hikes,” Brandstater said. “In the end, that’s how we are going to make up the lion’s share of lost revenue.”

Tuition, room and board for one-year at the private nonprofit college totals $23,300.

Senators step in

Brandstater says the college turned to legislation because the Higher Learning Commission refused to create an exception for schools like Kettering. Legislators cannot force the accreditation group to change its requirement, so they were left with one option: change Medicare laws.

Ohio senators Rob Portman, a Republican, and Sherrod Brown, a Democrat, introduced a bill in March to do just that. The Making the Education of Nursing Dependable for Schools (MEND) Act would allow colleges like Kettering to continue to receive Medicare money, even after they break off from a hospital.

“It addresses something that is important to the Dayton area, but also other hospitals in Ohio,” Portman told this newspaper. “It ensures that a lot of the primary care workforce is prepared for the growing demand for health care services.”

Portman hopes to have the legislation passed as part of a broad health care bill being discussed by the U.S. Senate Committee on Finance — one of his committee assignments.

The bill also has been proposed in the U.S. House, with Rep. Mike Turner, R-Dayton, among its supporters.

“We think this could be relatively non-controversial,” Portman said. “We have a good mix of co-sponsors, and we think it’s appropriate for us to ensure that we can host nursing programs in Ohio and not allow CMS (Centers for Medicare and Medicaid Services) inadvertently to keep our training of nurses and other healthcare-related jobs from moving forward in Ohio.”

Enrollment at stake

Brandstater is hopeful Congress can deliver a solution, but says the college can’t wait to act.

“Legislation takes time and the outcome of legislation is uncertain,” he said. “We are in a position now where we are really forced to make the transition down a path that will culminate in the complete loss of Medicare funding.”

To prepare for that possibility, the school hiked tuition 5 percent last year, and another 5 percent this year. Steeper increases will be needed if the bill doesn’t pass.

The tuition increases, Brandstater says, already are affecting enrollment, which currently is at 732.

Paul Lee, a senior partner at Washington-based Strategic Health Care and a lobbyist for the bill, said many hospital-based nursing schools are making similar tuition hikes.

“You can’t wait for 2019, or 2020, the reason is simple: If you lose all your Medicare money, most would have to raise tuition 34 to 40 percent,” Lee said. “If they started now, raising tuition, they may be able to do it in a way that’s a transition, and not put a lot of students in jeopardy.”

If the MEND Act passes, Brandstater says he will make a recommendation to the board to “roll back” tuition increases.

Feds ‘crack down’

Republican presidential hopeful Marco Rubio is among the most vocal critics of the accrediting industry, calling it a “biased and broken sys­tem.” In a speech last summer, Rubio said accrediting organizations are a “cartel of existing colleges and universities, which use their power over the accreditation process to block innovative, low-cost competitors from entering the market.”

In addition, accreditors have been criticized for allowing colleges, in particular for-profit schools, with low graduation rates or high loan defaults to stay open.

That pressure, Lee said, pushed the U.S. Department of Education to “crack down” on accrediting organizations “to raise the bar.” That’s what pushed the Higher Learning Commission to make the policy change, including making sure colleges were operating independently.

“We got caught up in the crossfire,” he said.

The Chicago-based Higher Learning Commission wouldn’t say what role that “crackdown” played in its decision. However, the group did say Kettering wasn’t the only college out of compliance.

“This requirement affects all HLC member institutions. A small number of nursing colleges (12, one of which is in Ohio) are not yet in compliance with this bylaw. In 2010, HLC began working with the nursing colleges to identify ways they can come into compliance. HLC has granted an extension until 2020 for these 12 colleges. All 12 colleges have provided HLC with a plan to come into compliance on this issue by that time,” the commission’s Heather Berg wrote in an email to this newspaper.

The Higher Learning Commission’s requirements affect only colleges in its 19-state region.

Lee said the accrediting organization wouldn’t “budge one bit” because that could create a legal liability.

In total, there are about 160 nursing schools that are hospital-based and receive Medicare payments, including seven in Ohio. Of the Ohio schools, Kettering College is the largest recipient.

“Of the 160 schools, about one-third would close,” Lee said. “About 30 to 40 percent of the schools are in rural areas, where there are not other options (for nursing students).”