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Proposed budget cuts concern LTC groups

March 14, 2014
by Bob Gatty
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Some executives in the nursing home and long-term care (LTC) industry are no doubt doing cartwheels right now because Congress is so divided there is no conceivable way President Obama’s proposed 2015 federal budget will be passed intact.

They probably shouldn’t get too comfortable, however, because as lawmakers try to figure out how to finance scrapping the troublesome sustainable growth rate (SGR) formula for paying Medicare physicians, Congress could well turn to some of the budget’s Medicare cuts to help pay the $126 billion price tag.

“The long term and post-acute care profession has endured billions in cuts over the last several years,” said Mark Parkinson, president and CEO of the American Health Care Association and the National Center for Assisted Living (AHCA/NCAL). “Unfortunately, the [p]resident’s latest budget contains billions more in Medicare cuts that would jeopardize our ability to continue to provide access to quality care.”

Parkinson adds: “The math doesn’t add up—especially when the Medicare Payment Advisory Commission (MedPAC) concluded that overall margins for the skilled nursing profession are only 1.8 percent.”


In a statement posted by LeadingAge on its website, the association said it was pleased the budget would support the new Senior Housing with Services demonstration program as well as housing and home- and community-based services programs. The budget provides $440 million for Section 202 housing and includes $20 million for the Senior Housing with Services demo.

But LeadingAge expressed concern about sections of the budget that call for more Medicare reimbursement cuts to skilled nursing facilities (SNFs) and home healthcare providers.

Among the budget’s provisions that would affect the industry is a proposed restructuring of payments for post-acute care services using a bundled payment approach, beginning in 2019. This would reduce payment updates and equalize payments for certain conditions commonly treated in inpatient rehabilitation facilities (IRFs) and SNFs.

Under the provision, 75 percent of IRF patients would have to require intensive rehabilitation services, beginning in 2015. The budget would reduce SNF payments in relationship to hospital readmissions, beginning in 2019. All of that, it is estimated, would save $112.44 billion.


Meanwhile, the budget includes a statement that the president is “committed to working with Congress to continue progress toward reforming Medicare physician payments,” and it assumes no reductions in Medicare payments for physician services for 2014 to 2024. Physicians would be encouraged to join accountable payment models, and payment updates for physician services would be linked, over time, to participation in accountable care organizations.

In its outlook assessment, LeadingAge noted that because the budget deal passed by Congress in December includes spending targets for FY 2015, another budget process this spring is unlikely. Thus, the president’s proposed budget will not be considered in its entirety, although pieces may find their way into spending bills for various federal programs.

That’s where danger could arise for the long-term care industry.

LeadingAge noted that “the president’s proposals and other potential cuts could figure into the Medicare sustainable growth rate [SGR] (doc-fix) reform legislation on which [c]ongressional action is still possible. Neither the House nor the Senate have decided upon pay-fors to cover the cost of the doc-fix legislation upon which they have agreed.”


Parkinson reiterated what he has said many times before—that the industry has proposed ways to cut Medicare costs without jeopardizing patient/resident care. The president’s budget also contains provisions with which his organization agrees.

“Our profession is ready to address our nation’s budget problems with solutions that don’t simply rely on further cuts,” Parkinson said. “One example in the president’s budget is a proposal to reduce costly readmissions to hospitals. We have a proposal on Capitol Hill that would do just that, saving Medicare nearly $2 billion while improving health outcomes.

“Another is a proposal to bundle payments for post-acute care (PAC) services. We support the president’s approach to PAC-only bundles and his understanding that PAC providers are best positioned to appropriately manage patient care in PAC settings. Finally, we support the president’s proposal for payment equalization for certain conditions treated in both inpatient rehabilitation facilities and skilled nursing centers,” Parkinson added.


Meanwhile, AHCA/NCAL expressed concern about a proposed rule making substantial changes in Medicare managed care, the Medicare Advantage (MA) program and the Part D Medicare prescription drug program. The proposal, published by the Centers for Medicare & Medicaid Services, would tighten the operational requirements for MA programs and ease current requirements on medications covered under Part D.

“When and where our nation’s seniors receive their post-acute care and Part D medications should always remain their choice,” Parkinson said. “With [MA] rapidly expanding, we must ensure that Medicare beneficiaries have the proper protections in place and that means stringent federal oversight over these plans.”

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.