Long-term care providers would have their payment rates reduced as part of Gov. Mark Dayton's budget plan released Tuesday.
The governor is proposing a 4.5 percent cut to home and community-based services. Nursing homes would have their reimbursements cut by 2 percent.
Commissioner of Human Services Lucinda Jesson said the rate reductions are painful, but fair.
"Nursing facilities have not had a rate reduction, unlike many other health care providers in recent years," Jesson said. "We know this will be difficult. But in this time, we think this is something they can manage. And we will try to work with them as they do so."
Dayton is also proposing an increase in Medical Assistance surcharges for nursing homes, health plans and hospitals. But Jesson said those taxes would bring in more federal funds that will allow the state to increase Medical Assistance payments to providers.
She said nursing homes and health plans should mostly break even on the surcharge, while hospitals will recoup about half of their additional tax payments.