The aftermath of the ACA: What a complicated mess!

July 19, 2012
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Bob Gatty
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Politics and a heavy dose of skepticism are prompting many state governors to resist expanding their Medicaid programs now that the U.S. Supreme Court, in upholding the Affordable Care Act (ACA), has ruled that the federal government cannot force them to do so.

Those decisions, taken individually state-to-state, will be important to long-term care facilities that serve patients with Medicaid benefits, even though numerous studies have shown that reimbursement from Medicaid doesn’t come close to being sufficient.

At the same time, as soon as the election is over, Congress will be faced with the challenge of dealing, once again, with the federal budget crisis because mandated across-the-board reductions in most federal programs, including Medicare, will take effect in January 2013—unless a new deal is reached.

In May, the Alliance for Quality Nursing Home Care released an analysis by Avalere Health showing that the sequestration required by the Budget Control Act (BCA) would reduce U.S. seniors’ Medicare-funded skilled nursing home care by $782.3 million nationwide.

“Vulnerable nursing home patients, a fragile front line care workforce and economically stressed facilities across America have been battered by a cascade of Medicare and Medicaid funding cuts over the past several years, and the sequestration threat looms large over a health sector caring for rising numbers of higher acuity patients,” declared Alan G. Rosenbloom, president of the Alliance, which funded the study. “Demographic reality and the rapidly evolving nature of our patient population requires a more rational, cost-effective Medicare post-acute payment system—not more irrational Medicare cuts that jeopardize ongoing access to quality care.”

How Congress deals with those automatic cuts required by the BCA is anybody’s guess and largely depends on the results of the November elections. While Medicaid is exempt from those reductions, Medicare is not—and, according to a study by the bipartisan Congressional Research Service, providers of services, including hospitals and physicians, will largely pay that tab through reduced payments of at least 2 percent.

Those cuts would be separate from any reductions that are imposed as a result of the sustainable growth rate (SGR) formula mess, now slated to average 27 percent for 2013, according to the 2013 Medicare fee schedule announced July 6 by the Centers for Medicare & Medicaid Services. Family physicians, however, are slated to receive a 7 percent increase and other practitioners providing primary care services are in line for pay boosts of between 3 and 5 percent.

In its announcement of the proposed rule to implement the 2013 fee schedule, CMS noted that Congress has acted to avert such cuts required by the SGR every year since 2003, and that the Obama administration “is committed to fixing the SGR formula in a fiscally responsible way.”

That won’t be easy, given the size of the federal deficit and the current political atmosphere. The CBO sequestration report noted that the 10-year cost of freezing physician payments at the current level would be $300 billion for 2012-2021, and higher if payments were increased by a medical inflation factor.

In addition, CBO said it is unclear how reductions under sequestration will affect, or be affected by, the operations of the Independent Payment Advisory Board (IPAB), established by the ACA. Any savings the IPAB decrees are expected to come from providers.

Meanwhile, the debate over state expansion of Medicaid under the ACA rages on as some governors like Rick Perry of Texas, a Republican, pledges on a stack of Bibles that his state will not participate in the Medicaid expansion program—even though the law requires the feds to pick up most of the cost.

“I stand proudly with the growing chorus of governors who reject the Obamacare power grab,” Perry declared. “Neither a ‘state’ exchange nor the expansion of Medicaid under this program would result in better ‘patient protection’ or in more ‘affordable care.’ They would only make Texas a mere appendage of the federal government when it comes to health care.”

It was a large group of states with GOP governors whose challenge of the ACA led to the Supreme Court’s ruling, and many of them have either decided, or reportedly may decide, to forgo the additional federal payments that would come from expanding Medicaid eligibility in their states.

They say Washington is broke and there is no guarantee that the promise to pay the tab will hold true in the future, thus jeopardizing their states’ own precarious budget situations. And, they fear that pay boosts for Medicaid doctors required by the ACA could eventually be forced onto the states as well.

So it is a complicated mess that awaits Congress following election, and it’s a mess that will affect federal financial support for LTC facilities who depend upon both Medicare and Medicaid to serve their patients.

Bob Gatty has covered governmental developments for the trade and business press for more than 30 years. He is founder and president of G-Net Strategic Communications, Sykesville, Md.

 

           

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