Nursing Home Payment Cuts: What It Really Means

Payments to nursing homes will be cut by 11.1% by the Centers for Medicare and Medicaid Services.  The reduction, set to go into effect on October 1st, will result in a $79 billion loss to the industry over the next 10 years. The decision, not surprisingly, was met by resistance from operators and advocates who say the quality of care will suffer. Advocates urging Congress to preserve senior health care funding

Medicare payments aren’t the only problem. Medicaid, regulated on a state-to-state basis, is also suffering in many states, and a number of state lawmakers have already enacted or proposed cuts to Medicaid nursing home payments. Ohio and Florida have already enacted such measures, which will further reduce revenues and operating capital for skilled nursing facilities, which typically rely heavily on Medicaid funds.

The industry is fearful that a “Special Committee” formed by Congress, which is charged with further reducing the national debt by $1.5 trillion over the next decade, will make further cuts to Medicare spending.

The Alliance for Quality Nursing Home Care is one group advocating for preservation of health care spending and services that benefits seniors. The Alliance issued a statement on August 11th outlining the challenges faced by the skilled nursing sector, including:

  • $14.6 billion in prior cuts under the Affordable Care Act
  • Rising costs
  • Shortened length of stay
  • Higher patient acuity
  • Low operating margins
  • Medicaid cuts

A related article stresses the nursing home industry’s contribution to economic recovery, noting that the skilled nursing industry is the country’s second largest health facility employer, accounting for 1.7 million jobs and $201 billion in annual economic activity. (Based on research findings from Avalere Health.) Alan Rosenbloom, president of the Alliance for Quality Nursing Home Care, states, “In addition to being a vital pillar of the U.S. economy and pivotal to badly-needed jobs growth in a dangerously weak economy, facilities have invested heavily to increase capabilities to admit, treat and return to home a rapidly increasing number of patients requiring intensive post-acute rehabilitation and care for multiple chronic illnesses.”

MarketWatch points out that cuts could result in increased costs for residents. Toby Edelman, senior policy attorney with the Center for Medicare Advocacy, says operators will be under pressure to make up the loss somewhere, and it’s likely to fall on the shoulders of residents paying for care out-of-pocket. Even if private pay costs increase, residents may still see a decrease in the overall quality of care as staffing cuts and cost-cutting measures will indirectly impact resident care.

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