New Federal Regulation Reduces Michigan's Medicare-Funded Nursing Home Care by $185.59 Million

Regulation That Went Into Effect Over Weekend on October 1 Puts Facility Stability, Patient Care, Jobs at Substantially Increased Risk

LANSING, Mich., Oct. 4, 2011 /PRNewswire-USNewswire/ -- With a new federal regulation going into effect over the weekend that reduces Medicare funding for Michigan skilled nursing facilities (SNFs) by $185.59 million in fiscal year 2012, the Alliance for Quality Nursing Home Care expressed concern that escalating economic instability facing Michigan facilities is placing quality patient care and jobs stability at substantially increased risk. SNFs are Michigan's second largest health facility employer after hospitals, and Avalere Health compiled the state data.

The President of the Alliance for Quality Nursing Home Care, 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, including Michigan, pointed to job losses at a Nebraska SNF attributed specifically to the new federal Medicare regulation. He expressed concern the Nebraska situation represents the leading edge of additional job losses and layoffs throughout states like Michigan with large rural areas as facilities, care staff and patients struggle with an accumulation of Medicare and Medicaid funding pressures.

Observed Alan Rosenbloom, President of the Alliance: "Because the U.S. nursing home sector has the lowest operating margin of all health care providers, we have deep concern that a torrent of multi-year federal Medicare funding reductions combined with ongoing Medicaid pressures could inevitably manifest themselves in the form of facility job losses and a concurrent negative impact on patient care. The prospect of still more Medicare funding reductions from Washington stemming from Congressional Super Committee activity would hurt Michigan seniors, 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."

The national and state analysis by Avalere Health finds the new CMS regulation that went into effect 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 Michigan nursing home sector cumulates on $29.4 billion nationally in Medicare payment cuts enacted to fund healthcare reform, and a $16.8 billion national Medicare payment reduction in 2010 regulation.

The Alliance leader said yet another Medicare funding reduction of $42 billion proposed in September by the Obama Administration -- on top of the new CMS regulation, and coinciding with state Medicaid pressure – "would 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 Michigan."

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 this summer, characterized the CMS funding reductions as "larger than expected" and "ignited worries that reimbursement reductions will impair cash flow prospects." Concluded the Alliance leader: "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