CMS Regulation, Now in Effect, Reduces Medicare-Funded Nursing Home Care by 11.1%; Causes Alarm About Facility Job Losses

Oct 03, 2011, 12:37 ET from Alliance for Quality Nursing Home Care

Nebraska Nursing Home Eliminates Jobs Citing New CMS Regulation; AQNHC President Expresses Concern Nebraska Job Losses Represent Leading Edge of Losses in Other States Like Ohio, Florida

WASHINGTON, Oct. 3, 2011 /PRNewswire-USNewswire/ -- Pointing to job losses at a Nebraska nursing home attributed to a new federal Medicare regulation reducing facilities' funding by 11.1 percent -- that went into effect October 1 -- the President of the Alliance for Quality Nursing Home Care today expressed concern the Nebraska situation represents the leading edge of additional job losses and layoffs throughout the nation as facilities, care staff and patients struggle with an accumulation of Medicare and Medicaid funding reductions. According to Avalere Health, the CMS rule reduces Medicare funding by $79 billion over ten years.

"The nursing home job losses just announced in Nebraska -- attributed specifically to the 11.1 percent CMS Medicare funding reduction that went into effect on October 1st -- coincides with growing concerns in other states like Ohio and Florida that facility job losses are imminent as they also battle new state Medicaid cuts," warned Alan G. Rosenbloom, President of the Alliance, a coalition of 12 leading post-acute and long term care organizations providing skilled nursing care in approximately 1,400 facilities in 44 states nationwide.

The Lincoln Journal-Star reports in a story entitled, "Medicare Cuts Force Tabitha to Trim Jobs," Tabitha Health Care "eliminated roughly 30 positions last week, mostly in response to a pending 11 percent reduction in Medicare payments for skilled nursing care." The story notes, "Approximately $1 million of the lost income will result from a federal 11 percent reduction in Medicare payments for skilled nursing care -- care for temporary patients discharged from hospitals but not ready to go home -- that takes effect Oct. 1."

Observed Rosenbloom: "Because the U.S. nursing home sector has the lowest operating margin of all health care providers, we have deep concern that multi-year federal Medicare funding reductions combined with Medicaid cuts in states like Ohio, Florida and elsewhere will inevitably manifest themselves in the form of facility job losses and the inevitable negative impact on patient care. The prospect of still more Medicare cuts stemming from Congressional Super Committee activity would obviously be devastating to nursing home patients, disastrous to caregiver jobs, and undermine facilities' ability to admit, treat and return to home a rapidly increasing number of patients requiring intensive post-acute rehabilitation, and care for multiple chronic illnesses."

An analysis by Avalere Health finds the new CMS regulation that went into effect Saturday, October 1 will reduce Medicare payment to the nation's nursing home sector by $79 billion over 10 years. This new and latest reduction in payments to the sector -- America's second largest health facility employer -- cumulates on $29.4 billion in Medicare payment cuts enacted to fund healthcare reform, and a $16.8 billion Medicare payment reduction in 2010 regulation.

The Alliance leader said additional $42 billion Medicare cuts proposed earlier this month by the Obama Administration -- on top of the new CMS regulation, and on top of the state Medicaid cuts – "will significantly contribute to further destabilizing the state's second largest health facility employer, and the substantial economic activity nursing homes generate throughout rural, suburban and urban America."

Rosenbloom said the recent Standard & Poor warning about increased volatility in the nation's nursing home sector is a direct result of government payment decisions. S&P, according to news reports, characterized the CMS funding reductions as "larger than expected" and "ignited worries that reimbursement reductions will impair cash flow prospects." Said Rosenbloom: "The S&P warnings made earlier in the summer should have been heeded, and for the benefit of patients and local jobs preservation, we urge Congress and the President to help bring about payment stability to the nation's nursing home sector – not more economic chaos."

SOURCE Alliance for Quality Nursing Home Care