Amid New ATRA Medicare Part B SNF Medicare Cut, Recent Headlines Spotlight Sector Economic Instability, Credit Crunch, Facility Closure

Jan 31, 2013, 12:53 ET from Alliance for Quality Nursing Home Care

WSJ Reports Lenders Fear SNF Sector's Ongoing Exposure to Funding "Curtailments", Texas Facility Closing Due to 11% Medicare Cut/3% Medicaid Cut

WASHINGTON, Jan. 31, 2013 /PRNewswire-USNewswire/ -- With the U.S. skilled nursing facility (SNF) sector now facing $65.6 billion in total FY 2012-21 Medicare funding reductions following the American Taxpayer Relief Act's (ATRA) new change to Medicare Part B therapy payments, a series of recent national and state headlines focusing on a SNF credit crunch, facility closures and economic dislocation underscore the escalating instability facing the nation's second largest health facility employer. SNFs, their patients and workforce are now bracing for yet $9 billion more in Medicare cuts from the March 1, 2013 Budget Relief Act sequester provision.

"ATRA's changes to Medicare Part B payments for therapy have upped the SNF sector's cumulative Medicare funding reductions to $65.6 billion over the next ten years, and the pre-existing economic instability afflicting the nation's second largest health facility employer is being spotlighted by national and state headlines that paint an increasingly worrisome picture for providers and the vulnerable patients under their care," warned Alan G. Rosenbloom, President of the Alliance for Quality Nursing Home Care.

"The latest ATRA Medicare cuts are compounded by freezes or cuts in Medicaid rates in 40 state Medicaid programs since 2009," Rosenbloom continued. "Given that 70 percent of SNF patients depend upon Medicare and/or Medicaid funding for their care, the economics of SNF care are in turmoil -- and this is corroborated by recent reporting."

ITEM: The 1/29/13 Wall Street Journal article "Nursing Home Operators Turn to the U.S." details how the Federal Housing Administration (FHA) "has come to the rescue of nursing home operators that are having a tough time obtaining traditional financing for mortgage loans." While several factors are contributing to the SNF credit crunch, the WSJ reports, banks are getting more cautious because SNFs are "in an environment where state budgets have been strained and fear threatened curtailments to Medicare."

ITEM: The 1/17/13 KTEN-10 News (North Texas) story reports that "Nearly 100 senior citizens are now searching for a new place to live because the nursing facility they're currently at is shutting down… Hilltop Haven in Gunter, Texas has been in business for 65 years, and a representative tells us deep Medicaid and Medicare cuts over the past two years are the reason it's finally going out of business." Specifically, a facility spokesman said, "Medicare cuts of 11% and Medicaid cuts of 3% forced the closure."

ITEM: KHQA-7 (Quincy, IL) reports, "Illinois Senior Care Providers Brace for Budget Cuts" and notes facilities have had to borrow money because the state is three to six months behind with Medicaid payments. One facility said they might have to "cut back some areas of care."

The $65.6 Billion SNF Medicare funding reduction (FY 2012-FY 2021) is comprised of: Productivity Adjustment (ACA-mandated): $34 Billion; Forecast Error (Case-Mix) Adjustment: $16 Billion; Forecast Error (Market Basket) Adjustment in FY 2011 Rule: $3 Billion; Bad Debt (Middle Class Tax Relief & Job Creation Act of 2012): $3 Billion; ATRA Medicare Part B Reduction: $600 Million (estimated). Sequestration (3/1/13): $9 Billion (Source: Avalere Health)

Contact: Ellen Almond

SOURCE Alliance for Quality Nursing Home Care