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A bitter battle on Capitol Hill

June 12, 2012
by Bob Gatty
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Another bitter battle is brewing on Capitol Hill over how to prevent student loan interest rates from increasing from the current 3.4 percent to 6.8 percent on July 1, and believe it or not, nursing homes and other long-term care facilities may be asked to help pay the tab.

The proposal, which emanates from the Republican leadership in Congress and was approved by the House of Representatives, would cut the Medicaid provider tax threshold from 6 percent to 5.5 percent, effectively reducing federal Medicaid reimbursements to states—which, most likely, would reduce their nursing home support by a like amount.

However, that .5 percent cut is paltry compared to the 3.5 percent level proposed by the Obama administration.

Regardless, it is one of a number of “pay-for” ideas that have been considered, and the fact that it has been approved by one of the two chambers of Congress means there is reason for concern on the part of the nursing home industry.

Indeed, that concern has been clearly expressed by the industry’s leaders as they have pointedly told Congressional leaders that any more reductions in federal support simply is untenable.

“This new Republican Medicaid proposal coming on the heels of at least $3 billion in Medicare cuts in February—and after 40 states have either cut or frozen SNF Medicaid payments since 2009—is ill-advised, and overlooks our patients’ unique vulnerability to repeated Medicaid and Medicare funding cuts,” declared Alan G. Rosenbloom, president of the Alliance for Quality Nursing Home Care (AQNHC). “Off-the-cuff proposals that put the well being of the nation’s most vulnerable seniors in jeopardy warrant strong opposition on both principle and policy grounds.”

A recent Avalere Health analysis detailing the negative impact on SNFs resulting from “bad debt” provisions passed in the Middle Class Tax Relief and Job Creation Act of 2012 found the provisions will cut SNF payments by at least $3 billion over the FY 2012-21 budget period. A separate Avalere Health study found 40 states have either cut or frozen seniors’ Medicaid-financed nursing home care between 2009 and 2011, and underscores the inherent volatility of nursing home payments, AQNHC said in a news release.

Rosenbloom pointed out that the SNF sector is already slated to absorb another $48 billion in Medicare reductions between FY 2012-21, and that SNFs remain disproportionately reliant on Medicaid compared to other providers, with Medicare paying for 57 percent of patient days. SNFs face $782 million in additional Medicare cuts in January 2013 because of automatic budget sequestrations scheduled to be imposed unless Congress reaches agreement on an alternative solution.

Mark Parkinson, president and CEO of the American Health Care Association (AHCA) and the National Center for Assisted Living (NCAL) warned that cutting the provider tax threshold would cause a “ripple effect” in every state where nursing care centers operate. He said Medicaid reimbursement is already insufficient, with nursing homes losing nearly $6.3 billion in costs for Medicaid-covered residents for unreimbursed services.

“The Republican Leadership’s offer to finance student loans by gutting an important statutory way to pay for Medicaid spending in states is a prescription guaranteed to cause a major ripple effect in scores of states across the country if enacted,” said the former state governor.

“The entire Medicaid program stands to day in a policy and fiscal limbo,” he said. “Beneficiaries and costs are growing by the day. With the impending Supreme Court ruling (on the constitutionality of major parts of the new health care law), coupled with continued budget crunches at the state level, now is not the time to indiscriminately cut a key component of how skilled nursing care is financed.”

Parkinson’s organization sent a letter June 5 to House and Senate leaders urging that the proposal be rejected.

“Limiting states’ ability to use provider assessments to finance their Medicaid programs would do nothing to reduce the cost of health care or make Medicaid more efficient,” Parkinson wrote. “While we know that Congress must find ways to reduce federal spending and fund a wide variety of programs, we strongly encourage you to consider more appropriate methods to encourage efficiency in federal health programs, rather than arbitrarily cutting important programs.”     

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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