MedPAC Failure to Recognize Obvious Medicare-Medicaid Funding Link, Recent History of Medicare Reductions, Compounds SNF Sector Instability Threatening Care, Causing Job Losses
No Cost of Living Adjustment, Additional 4% SNF PPS Rebasing Cut Further Undermines U.S. Seniors
WASHINGTON, Jan. 12, 2012 /PRNewswire-USNewswire/ -- Noting the nation's Skilled Nursing Facility (SNF) sector is already surviving on razor-thin overall operating margins, reeling from a recent 11.1 percent Medicare funding reduction, and facing $127 billion in Medicare funding cuts in the FY 2012-21 budget window, the Alliance for Quality Nursing Home Care today expressed strong opposition to the Medicare Payment Advisory Commission's (MedPAC) recommendation that Congress provide no FY 2013 cost of living adjustment for SNFs. The Alliance also opposes MedPAC's guidance to revise the SNF Prospective Payment System (PPS) for 2013, which will result in an additional cut of at least four percent, but offered qualified support for an appropriately adjusted rehospitalization policy, contingent upon further discussions.
"With long term and post acute care providers across the nation beset by a barrage of federal and state budget cuts already jeopardizing seniors' care, and causing front line care job losses, we are alarmed by MedPAC's recommendation of no market basket increase for FY 2013," stated Alan G. Rosenbloom, President of the Alliance. "When combined with the Affordable Care Act requirement that CMS reduce annual market basket increases by a productivity adjustment, MedPAC's recommended freeze effectively translates into a cut from current payment levels, not merely a failure to increase payments to account for cost increases."
Rosenbloom continued that the Alliance is "deeply disturbed by MedPAC's continued failure to recognize the obvious link between Medicare and Medicaid in financing SNF care." While MedPAC bases its recommendations solely on Medicare margins, Medicaid margins continue to erode as a recent Eljay study that estimates the differential between the cost of providing quality care, and what is actually reimbursed, will total $6.3 billion for 2011.
Rosenbloom also expressed "major disappointment" that MedPAC failed to take into account a provision in the Affordable Care Act (ACA), which became applicable on January 1, to consider overall margins – necessarily including Medicaid – in making Medicare funding recommendations to Congress. MedPAC has argued that it should not consider the inadequacies of Medicaid funding because Medicare cross-subsidization benefits facilities with higher Medicare volume, not those with higher Medicaid volume. Given the distribution of Medicare volume among SNFs, however, this argument loses its potency.
The Alliance leader pointed to new data released yesterday by Avalere Health finding that Medicare typically composes less than 30 percent of SNF patient days, and that very few facilities have a Medicare mix greater than 50 percent – suggesting that total margins should be considered when thinking about the health of facilities caring for Medicare patients. Says Avalere in its news release: "Avalere's analysis found that no more than five percent of facilities have Medicare shares of 50 percent or higher. For the vast majority of facilities (90 percent), Medicare represents less than 30 percent of total patient days. These findings are equally true for non-profit and for-profit facilities. For three-quarters of facilities with Medicare shares below 30 percent, Medicaid accounts for the majority of patient days."
"The idea that MedPAC can or should look at SNF payment rates in a vacuum fails to acknowledge the practical reality that the Medicare and Medicaid populations overlap in these settings, and ignores the crucial influence that Medicare rates have on improving quality outcomes for all patients, particularly the dually eligible population," Rosenbloom continued. "While it may make theoretical sense to assert Medicare should pay only for Medicare beneficiaries, in practice, this vastly oversimplifies how this health sector operates, and severely misjudges how services are ultimately financed for this vulnerable patient population. Academic literature makes clear that cuts in Medicare payments to SNFs results in quality threats to longer-stay patients, for whom Medicaid provides the overwhelming percentage of payment but whom, as dually eligibles, also should be MedPAC's concern."
MedPAC's proposed rebasing, which assumes a minimum four percent reduction in Medicare spending for SNF care, is untenable on its face, he said. When added to the cascade of Medicare and Medicaid cutbacks the SNF sector has faced since 2010, however, Rosenbloom said, "the cumulative impact would likely lead to substantial adverse consequences for jobs, the economy and patient care."
Rosenbloom did note that the Alliance "generally supports rational rehospitalization programs tied to payment incentives," but also noted that such programs also ultimately must focus not on provider silos like SNFs or acute care hospitals. Said Rosenbloom: "Unnecessary rehospitalizations are a systemic problem and should be dealt with systemically. A piecemeal approach that creates one program for acute care hospitals, another for SNFs, and yet others for different provider types will not achieve the integrated, systemic reductions in rehospitalizations patients deserve."
The Alliance leader, underscoring the enormous pressure placed on SNFs, their patients and their workforce resulting from the Centers for Medicare and Medicaid Services' (CMS) 11.1 percent Medicare funding reduction that went into effect on October 1, 2011, reiterated his call for a three year phase in of the regulation. The CMS action reduces Medicare funding by $79 billion over ten years, according to Avalere Health, and is projected to cause at least 20,000 job losses as facilities simultaneously battle with Medicaid cuts resulting from state legislative actions.
Continued Rosenbloom, "As the President and Congress begin prioritizing FY 2013 budget, the Alliance intends not only to aggressively spotlight the continuing impact of the cumulative funding pressures placed on facilities, staffing and patient care, but also to advance policy proposals to help improve quality patient care in the most cost-efficient manner possible."
SOURCE Alliance for Quality Nursing Home Care
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