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Cumulative Medicare, Medicaid cuts are hurting SNFs

March 29, 2012
by Patricia Sheehan
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Recent Medicare and Medicaid payment reductions to U.S. skilled nursing facilities are creating a negative impact on direct service staff, hiring, wage rates, benefits and facility construction, according to a new policy paper

The paper, presented by The Alliance for Quality Nursing Home Care (AQNHC), with analytic support from Avalere Health, examines the cumulative negative impact of Medicare and Medicaid payment reductions on nursing facilities.

More than one-third of the nursing homes that responded to a recent survey conducted by Avalere Health planned to lay off direct service staff such as RNs, LPNs, CNAs, therapists and other staff. More than one-third of respondents also planned to indefinitely postpone or cancel new hiring of direct service staff and corporate or other non-direct service staff.

The survey responses indicated that payment reductions could result in at least 20,000 layoffs industry-wide and cancellation of approximately 400 nursing facility expansions or renovations that would have generated 20,000-25,000 new jobs.

Alliance president Allen G. Rosenbloom attributes the grim findings to a combination of recent hard-hitting blows to the skilled nursing industry from a series of Medicare and Medicaid funding reductions including a 3.3 percent case-mix adjustment in the FY 2010 rule; a market-basket productivity adjustment beginning in FY 2012 as part of the Affordable Care Act (ACA); and an August 2011 rule mandating an immediate 11.1 percent reduction to Medicare nursing facility payment rates.

“Often, nursing facilities have little more than two to three months to prepare for these cuts, and this unpredictability in funding makes it problematic to plan from year to year,” Rosenbloom said in a statement. Additional payment reductions are looming, the study reports, noting the Budget Control Act of 2011 mandates that the deficit be reduced through either enactment of legislation, or by sequestration. As Congress failed to make recommendations for deficit-cutting measures, SNF payment rates may be reduced by an additional 2 percent as of January 1, 2013.

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