Funding cuts uproar continues

Against a backdrop of warnings that a funding crisis looms on the horizon for Medicare, organizations representing skilled nursing facilities (SNFs) and long-term care hospitals (LTCHs) continue to protest recommendations of little or no payment increases for 2009 and sharp reductions over the next five years. On April 2, frontline caregivers from 16 states visited members of Congress urging them to reject funding cuts in the weeks ahead even as lawmakers digested the annual report of Medicare trustees that said the federal healthcare program for the elderly would run out of money by 2019 unless tax increases and cost cuts are implemented. “We are taking our message to Capitol Hill today to let lawmakers know that any cuts to Medicare-financed nursing home care in the weeks ahead will negatively impact the very well-being and livelihoods of their most vulnerable constituents,” declared Lisa Cantrell, a cofounder of the National Association of Health Care Assistants and spokesperson for the Coalition to Protect Senior Care. “We will be monitoring lawmakers’ votes and actions carefully in regard to Medicare cuts and we will ensure local seniors are well aware of their lawmakers’ record in this regard. Both nursing home care quality and the jobs of the key caregivers who make a difference in patient outcomes are on the line.”

‘Razor-thin’ margins

In a letter to House Speaker Nancy Pelosi (D-Calif.) and Minority Leader John Boehner (R-Ohio), U.S. Representatives Tim Walz (D-Minn.) and Chris Shays (R-Conn.) pointed out that proposals from the Bush Administration would “enact deep cuts in Medicare spending for skilled nursing care.” The letter pointed out that one proposal would eliminate Medicare’s annual inflation adjustment for SNFs, “cutting nearly $1 billion in 2009 alone.” Moreover, the administration is proposing to slash another $4.7 billion by 2013, they said, adding that the proposals combined would cut Medicare skilled nursing care by nearly $19 per patient per day next year. “At a time when Congress is working to stimulate economic activity and jobs growth, these Medicare cuts would jeopardize direct care jobs 86% of which are held by women whose salaries are modest and whose families depend on receiving annual cost-of-living increases,” the Congressmen said. “We feel strongly that these dedicated direct care workers are a key reason we have seen meaningful quality improvement in skilled nursing care in recent years.” The lawmakers went on to say that nursing homes operate on “razor thin” margins and without stable Medicare payments, many would lack the necessary resources to invest in the facilities and technology necessary to provide the highest quality care.

Proposed cuts

The cuts at issue were proposed by the Medicare Payment Advisory Commission (MedPAC) in its report to Congress in March and in President Bush’s federal budget for 2009. Essentially, MedPAC projected Medicare margins for SNFs of 11.4% in 2008 and said beneficiaries have good access to necessary services. “Because all access indicators are positive and SNF payments appear to be more than adequate to accommodate cost growth, the commission recommends that the Congress eliminate the update for SNFs in 2009,” MedPAC Chairman Glenn M. Hackbarth told the House Ways and Means Subcommittee on Health during a hearing March 11.

The Alliance for Quality Nursing Home Care has protested that recommendation repeatedly calling it “flawed and not reflective of the true economic conditions” faced by nursing homes today. Alliance President Alan G. Rosenbloom on March 11 said Congress should amend MedPAC’s charter to require consideration of inadequate Medicaid payments when making its recommendations. However, Hackbarth told the subcommittee that subsidizing other payers, such as Medicaid, through Medicare SNF payments would not be effective or advisable. “First, the subsidy would be poorly targeted,” he said. “Facilities with high shares of Medicare payments, presumably the facilities that need the revenues the least, would receive the most in subsidies and those with high shares from Medicaid or other payers (would receive) the least. Second, increasing Medicare’s payment rates could encourage states to reduce Medicaid payments further and, in turn, result in pressure to again raise Medicare rates.” Hackbarth said the Centers for Medicare & Medicaid Services (CMS) should adopt a quality incentive payment policy for SNFs by considering rates of community discharge and potentially avoidable rehospitalization and then, over time, add additional measures that reflect other aspects of SNF care.

He also said CMS should improve public reporting of post-acute care quality indicators by:

  • Adding the rates of community discharge and potentially avoidable rehospitalization to its publicly reported indicators

  • Revising the pain, delirium, and pressure sore measures currently reported so they are more accurate and evaluate only the care furnished during the SNF stay, not during preceding hospitalization

  • Gathering patient assessment information of admission and discharge so the quality measures based on patient assessment information reflect the care furnished to all SNF patients, not just those who stay long enough to have a second assessment completed for them

Meanwhile, MedPAC, in a letter to Kerry N. Weems, acting administrator of CMS, said a proposed update for long-term care hospitals of 2.6% proposed by CMS is too high and should be reduced. That recommendation would update the standard federal rate by the market basket (3.5%) less an amount (0.9%) to reflect case-mix increases due to changes in coding practice rather than patient severity. MedPAC said CMS should reassess case-mix growth to provide more up-to-date information for future adjustments.

The 2.6% increase recommendation from CMS was strongly opposed by the National Association of Long Term Hospitals (NALTH), which in a lengthy March 21 letter to CMS said the study used by CMS as a basis for the proposed reduction of 0.9% is more than 20 years old. “It cannot be justified in any way as meeting the audit standard which CMS has imposed on hospital providers and is simply not credible,” said NALTH General Counsel Edward D. Kalman in the letter. NALTH also objected to a proposal from CMS to impose a one-time 3.75% reduction at the end of a three-year period ending December 29, 2010, arguing that LTCH payments and costs have already been aligned for budget neutrality purposes as required by law.

Bob Gatty has covered governmental developments for the trade and business press for more than 30 years. He is founder and president of G-Net Strategic Communications, based in Sykesville, Maryland.

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