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Capitol defense: United LTC industry tackles Washington challenges

July 10, 2013
by Bob Gatty
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The challenges for the long-term care industry (LTC) continue to grow as state and federal officials, pressured to cut costs, increasingly target health care for savings with no end in sight.

Mark Parkinson, president and CEO of the American Health Care Association (AHCA), believes the organization is effectively poised to help defend member companies against further payment reductions he says could seriously impede their ability to provide the quality of care they are expected to deliver to their assisted living and nursing home clients.

Part of the reason for that is the recent merger with the Alliance for Quality Nursing Home Care, which further unifies the industry and strengthens the impact of lobbying efforts on Capitol Hill and in the state capitols across the nation. “We go into the battle this year with a more unified sector than we’ve had in 15 years because the Alliance has made the decision to combine with us. Now we can go to Capitol Hill with one voice, and I believe that will help us prevail,” Parkinson said in an interview with Long Term Living.

Noting that the Great Recession took a heavy toll on the economy, including LTC providers and skilled nursing centers, he said the sector nevertheless has managed to find its way despite a series of Medicare and Medicaid reductions, and continues to move forward.

However, he added, skilled nursing facilities (SNF) margins, estimated by some as less than 1 percent, “are thinner than ever” even as a “new march towards quality has continued.” At the same time, Parkinson said, the policymakers are moving towards bundling of services, with payment based on an outcomes approach rather than the traditional system of payment for specific services provided. AHCA’s challenge, he said, is to help its members ease into this new payment system by making sure cuts in the current structure are not so severe that companies simply cannot succeed.

Parkinson outlined these immediate public policy challenges the industry must face:

The Doc Fix. Congress must find a way by year’s end to prevent an across-the-board reduction of 24.4 percent in Medicare physician payments from taking effect—a cut that is required by Medicare’s Sustainable Growth Rate (SGR) formula under current law. The latest 10-year cost of repealing the SGR is $138 billion, and Congress typically will look to the healthcare sector for savings needed to offset that cost. Parkinson fears SNFs could be adversely affected.

Therapy Cap Extension. For the past several years, Congress has lifted the $1,900 cap on therapy payments under Medicare and, once again, AHCA is working to be sure that happens again this year. Combined, the one-year cost of that action, plus eliminating the 24.4 percent physician pay cut, will be about $22 billion—a cost that would be spread over 10 years.

“Our position is that because margins already have been cut to the bone, any further cuts will run the risk of our members not being able to provide the level of service they have provided in the past,” cautioned Parkinson. “In addition, that would be harmful as we move into this new payment model, which requires an investment in technology for electronic medical records capability. So cutting the rate would be counterproductive.”

In an “Issue Brief,” AHCA declared, “The increase in Medicare spending must be funded from other areas of the Medicare program because skilled nursing facilities’ Medicare rates already have been significantly reduced in a variety of ways.”

The Debt Ceiling. Later this summer, Congress will be forced to increase the debt ceiling, an action that could bring with it demands from conservatives to further cut spending. “We will be closely monitoring that to make sure we are not used as a ‘pay for,’” said Parkinson.

Rather than simply telling Congress “No, don’t cut us,” AHCA has developed legislation that it says would enable SNFs to continue to provide quality care without unfairly being targeted for payment reductions. “The Guaranteed Savings & Quality Care Act” addresses the problem of hospital readmissions, which the organization acknowledges puts a strain on both patients and the taxpayer. Here’s how it would work:

  1. After establishing a baseline for the SNF 30-day readmission rate and calculating costs associated with those readmissions, the Department of Health and Human Services (HHS) would set a targeted readmissions reduction goal for SNFs necessary to save $2 billion from 2015–2022.
  2. Skilled nursing facilities would work to reduce hospital readmissions to at least the targeted amount.
  3. If the savings target was not achieved, SNF market basket updates—the cost of living adjustments under Medicare—would be reduced to make up the shortfall.

In an “Issue Brief” on the topic, AHCA says the plan incentivizes SNF providers to improve quality and coordinate care; saves $2 billion to Medicare over 10 years; generates savings through improvements instead of simply slashing provider payments; and responsibly encourages SNFs across the country to share in the goal.

Parkinson is encouraged by the way the industry has come together to let lawmakers know of their concerns and their proposed solutions. In June, some 500 industry executives participated in a fly-in to take their message to Capitol Hill and on July 9, 20 industry leaders from across the country came to town to meet with lawmakers and staff in some 50 congressional offices.

In September, a new national ad campaign will be launched stressing the important role of nursing centers in providing affordable, quality care for seniors.

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