Job Losses in U.S. Nursing Home Sector Can Be Alleviated With Three Year Phase-In of Federal Regulation

Alliance for Quality Nursing Home Care Says "Immediate Shock" of 11.1 Percent Medicare Funding Reduction Causing Facilities to Weigh Staff Reductions, Postponed or Deferred Facility Improvements

WASHINGTON, Nov. 8, 2011 /PRNewswire-USNewswire/ -- The Alliance for Quality Nursing Home Care today said future job losses and growing economic instability in the nation's skilled nursing facilities (SNFs) resulting from a federally mandated 11.1 percent Medicare funding reduction can be significantly alleviated if the new regulation is phased-in over a three-year period.

A new Avalere Health survey conducted for the Alliance finds the federal regulation, which went into effect on October 1, 2011, will result in at least 20,000 potential job layoffs, and cancel approximately 400 facility expansions or renovations that could have created at least 20,000 new jobs.  The regulation corrected for a Medicare payment error and, at the same time, changed the method of payment for therapy services.  The combined impact of the regulation is having a significant negative impact at the local facility level, the survey shows.

"Recent changes in Medicare payments for skilled nursing facilities took too much out of the funding system too fast, and did so at a time of significant underfunding of state Medicaid program payments for nursing home care," stated Alan G. Rosenbloom, President of the Alliance. "A gradual phase-in of the federal regulation – which has been done in the past for other provider sectors – can help alleviate the dislocation and disruption causing many facilities to warn of layoffs and other negative developments. We urge Congress to pursue this logical, fair and responsible policy recourse."

Rosenbloom pointed out that more than 70 percent of all patients in nursing facilities rely on Medicare and Medicaid funding for care, and also said the Alliance fears the results of the national nursing home survey may actually under-represent the true impact of the regulation for two reasons:

First, he said, the changes related to therapy services will not begin to show any impact on payments until mid-to-late October, after the close of the survey period; and

Second, the Alliance leader said the majority of SNFs are freestanding or small providers, and they are less able to forecast and respond to the impact of payment system changes. "As more of the smaller providers become aware of the impact of the payment changes, we anticipate that the range of facilities compelled to take actions similar to those reflected in the survey released yesterday will broaden, and the collective negative impact will deepen as 2012 develops," he observed.

Rosenbloom said the prospect of yet more Medicare cuts from the Congressional Super Committee process now entering the legislative homestretch would be devastating to nursing home patients, and disastrous to facilities, local economies and caregiver jobs. Further cuts, he said, would be layered on top a series of reductions that, over the FY2012-21 budget window, will cut Medicare payments by approximately $68 billion, and will also reduce payments by an additional $60 billion due to the regulatory "correction."

SOURCE Alliance for Quality Nursing Home Care