Groundswell builds against Medicare cuts

With the election campaign heating up–one in which control of Congress is at stake along with the White House–nursing home industry advocates appear to be having some success in elevating the need for adequate funding as an issue worthy of attention. Of course, the budget submitted by President Bush for 2009 with its proposed $24 billion in cuts over five years for Medicare-financed nursing home care, is proving to be an easy target for lawmakers wanting to be seen as championing the cause of the elderly.

In early March, Sens. Tim Johnson (D-S.Dak.) and Susan Collins (R-Maine) fired off a letter to Senate Budget Committee Chair Kent Conrad (D-N.Dak.) and Ranking Member Judd Gregg (R-N.H.), urging the panel to “strongly oppose cuts to Medicare and Medicaid…especially those affecting long-term care.” The senators also initiated a “Dear Colleague” letter to all members of the Senate encouraging senators to join in opposing the administration’s proposed budget cuts.

That action came as House Budget leaders John Spratt (D-S.C.) and Paul Ryan (R-Wis.) received a similar letter from 76 members of the House of Representatives that was initiated by Reps. Shelley Berkley (D-Nev.) and Shelley Moore Capito (R-W.Va.). “We express our support for strengthening the Medicare and Medicaid programs, which care for our nation’s poor, frail, elderly, and those with disabilities,” the letter declared.

The Johnson-Collins letter to Budget Committee leaders said: “Despite the growing demand for long-term care, the existing financing mechanisms for Medicare and Medicaid are intertwined and increasingly dysfunctional. Medicare and Medicaid funding comprise the vast majority of all skilled nursing facility (SNF) payments. The administration’s cuts are especially egregious when the drastic underfunding of Medicaid-financed SNF care is considered. For 2007, SNFs received $4.4 billion less than needed to cover the costs of providing care to Medicaid patients, according to accounting firm BDO Seidman. However, the Administration’s fiscal year (FY) 2009 budget, fails to account for this perilous situation, which will only worsen as state economies continue to decline, since it calls for nearly $24 billion in cuts to Medicare SNF funding over five years.”

In urging their Senate colleagues to oppose the proposed Medicare cuts, Johnson and Collins said approximately 80% of nursing home patients rely on Medicare and Medicaid to pay for their long-term care, and “given that the fastest growing segment of our population are those 85 and older, our nation’s need for long-term care will continue to increase significantly.” Bruce Yarwood, president and chief executive officer of the American Health Care Association (AHCA), said the bipartisan effort by Johnson and Collins “is a strong beginning” in the Senate toward eliminating the administration’s cuts. He said they have drawn attention “to the chronic Medicaid underfunding crisis, which becomes still more problematic for patients and facilities when Medicare-funded nursing home care is cut in the manner proposed by the Bush Administration.” Alan Rosenbloom, president of the Alliance for Quality Nursing Home Care, repeated his assertion that the Bush Administration’s budget is “shortsighted and largely ignores the new realities of the Medicare post-acute marketplace, to the detriment of Medicare beneficiaries and the healthcare workers on whom they rely for quality services.” He said the budget would “take a giant step backwards in the profession’s ongoing efforts to achieve quality improvement” and would be “devastating” to the ability of nursing homes to sustain those improvements.

Yarwood and Rosenbloom also pointed to new data from Zogby International showing 63% of likely voters oppose the Medicare cuts while 45% “strongly oppose” the administration’s proposal. According to the survey, 56.9% of Democrats “strongly oppose” the Medicare cuts, as do 47.1% of independents, and 31.3% of Republicans. The Zogby survey of 1,105 likely U.S. voters was conducted for AHCA in mid-February and has a margin of error of 3%.

Meanwhile, as previously predicted here, the Medicare Payment Advisory Commission (MedPAC), has formally recommended that SNFs should receive no regular market basket update for 2009, a determination that was characterized by the Alliance as “flawed and not reflective of the true economic conditions nursing homes face in today’s marketplace.” Rosenbloom criticized MedPAC’s recommendation, saying the commission should be required to consider the overall economic conditions of the nursing home sector. “By ignoring the substantial losses nursing homes face due to inadequate Medicaid payments—a gap likely to grow as states facing tough economic times cut Medicaid payments to providers even more—MedPAC’s recommendation threatens the quality of care America’s nursing home patients deserve and the wages, benefits, and in some cases, very jobs of the hundreds of thousands of direct care workers employed in the nation’s nursing homes.”

Last December, when MedPAC prepared its recommendation, consultant Carol Carter, PhD, justified the rate freeze by saying, “We believe this is again a reasonable recommendation, given that margins are higher in 2006 than they were in 2005 and are more than adequate to accommodate cost growth.” Dr. Carter predicted that freestanding SNFs will record Medicare margins of 11.4% in 2008. “We think this is a conservative estimate,” she added.

In making its recommendation, MedPAC only considers Medicare performance. It does not consider Medicaid, although the commission did acknowledge the shortfall in Medicaid funding. “When formulating its recommendations to Congress, MedPAC should be obligated to evaluate the real and growing interdependence between Medicare and Medicaid,” Rosenbloom said. “Substantial Medicaid losses offset Medicare gains; the result is that overall operating margins for America’s nursing homes hover close to 3%—far less than those of any other group of healthcare providers.”

Several other recommendations by MedPAC, however, are supported by the Alliance. “We concur with MedPAC’s conclusions that current post-acute quality measurements are inadequate and require meaningful restructuring to better access the care and services provided to a growing short-term, medically complex patient population in nursing homes,” Rosenbloom said. The recommendations, he added, acknowledge the growing importance of skilled nursing facilities to the cost-effective provision of post-acute services to Medicare patients. “While we fundamentally disagree with MedPAC’s approach to payment recommendations, we believe that revamping post-acute quality measures is an important step for the future,” he said.

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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