Alliance Strongly Opposes President Obama's New Medicare, Medicaid Cuts While Noting Benefit of Correctly Rationalizing, Improving Medicare Post-Acute Payment System

Also Says House Ways and Means Committee Minority Discussion Document Disproportionately Targets SNF Sector With Deep Medicare Cuts

WASHINGTON, Sept. 19, 2011 /PRNewswire-USNewswire/ -- Noting that skilled nursing facilities (SNFs) provide high quality care to seniors while also benefiting taxpayers with cost efficient care delivery, the Alliance for Quality Nursing Home Care (The Alliance) today expressed strong opposition to President Obama's new $42 billion Medicare cuts over ten years directed at post-acute care providers, but expressed a desire to work collaboratively with the Administration to correctly rationalize and improve the nation's Medicare post-acute payment system. The combination of these new Medicare cuts, combined with other new Medicaid cuts, would undermine both the ongoing provision of quality care and the ability of America's second largest health facility employer to maintain its status as one of the few job growth sectors in a weak U.S. economy, said the Alliance.

"The new Medicare and Medicaid cuts proposed today – on top of the many cuts already in place -- would significantly compound the growing SNF sector instability placing patients, our workforce and local facilities at risk," observed Alan G Rosenbloom, President of the Alliance. "We will continue to point out that SNFs are already part of the solution to cost efficiency in the context of the deficit reduction discussion, and is key to maintaining quality care at a comparatively favorable price point. Further weakening our sector with more Medicare and Medicaid cuts is counterproductive to our nation's health care objectives."

Rosenbloom also said a recent discussion document being considered by House Ways and Means Minority members describing various options to cut federal healthcare spending disproportionately targets the SNF sector: "More cuts on top of the many already in effect would not only undermine quality improvement programs already benefiting seniors, but further destabilize local facilities already reeling from a series of budgetary and regulatory actions." The Alliance leader also observed that since the Ways and Means Committee does not have jurisdiction over Medicaid, the discussion document ignores some of the proposals on Medicaid offered by many of the same sources identified as "policy origin" – thus making the Medicaid side of the SNF funding equation even worse. "This completely reinforces the need to examine the SNF funding situation holistically, not on a program-by-program basis – and we are obliged to point out this key fact."

Over the past several years, the Alliance leader pointed out, the federal government has implemented a series of reductions in Medicare payments to SNFs that will lower payments by more than $125 billion in the FY 2012-21 period, and which is contributing to severe sector instability.  Specific changes and funding challenges include:

• FY 2010 CMS Rule. Estimated decrease of $16.8 billion over 10 years (FY 2012-2021) from the 3.3 percent forecast error (i.e., case mix) adjustment in FY 2010.
• Federal Health Reform. Estimated decrease of $29.4 billion over 10 years from productivity adjustments/reductions in the market basket (inflation) update starting in FY 2012.
• 2010 Regulation. Estimated decrease of $2.6 billion over 10 years from the 0.6 percent forecast error cut in the market basket update for 2011.
• FY 2012 CMS Rule. Estimated decrease of approximately $60 billion over 10 years from the 11.1 percent RUG recalibration/parity adjustment and an estimated decrease of at least another $19 billion over 10 years from changes to payments for therapy services (at least an additional 3.5 percent cut in Medicare).  The $19 billion, in particular, represents actual reductions in Medicare payments for beneficiary services, not merely correcting for an "inadvertent overpayment" by CMS.  
• Medicaid Cuts. The deteriorating economic conditions across the country also have led to significant reductions in Medicaid payments to nursing homes, compounding the risk to providers, employees and patients.

SOURCE Alliance for Quality Nursing Home Care