Alliance Urges MedPAC to Recognize Medicare-Medicaid Funding Link as Study Details Razor-Thin SNF Margins

As MedPAC Meets Today to Consider SNF Medicare Funding, Alliance Urges Caution as Facility Job Losses, Threat to Patient Care Proliferate

WASHINGTON, Dec. 15, 2011 /PRNewswire-USNewswire/ -- Concurrent to a new independent study finding the nation's second largest health facility employer is already surviving on razor-thin operating margins, the Alliance for Quality Nursing Home Care (Alliance) today urged the Medicare Payment Advisory Commission (MedPAC) to make Medicare funding decisions based upon the significant, documented underfunding of Skilled Nursing Facility (SNF) patient care by state Medicaid programs.

"In sum, the idea that Medicare can or should look at SNF payment rates in a vacuum fails to acknowledge the practical reality that the Medicare and Medicaid populations overlap in these settings and ignores the crucial influence that Medicare rates have on improving outcomes for all patients," said Alan G. Rosenbloom, President of the Alliance. "While it may make theoretical sense to assert that Medicare should pay only for Medicare beneficiaries, in practice, this vastly oversimplifies how this sector of health care operates -- and misjudges how services are ultimately financed for this patient population," Rosenbloom continued. 

The Alliance leader's comment comes on the heels of a new study by the Moran Company, conducted for the American Health Care Association (AHCA), finding that nursing homes nationwide were operating at a margin of 0.75 percent of revenues in 2009. The study also details that a two-year suspension of market basket (cost of living) adjustments combined with a 25 percent limit on the federal government's coverage of costs from Medicare bad debt could result in nursing facility margins falling as low as -3.1 percent over a 10-year projection.

Pointing out a separate Avalere Health survey of SNFs that finds facilities already plan to lay off more then 20,000 workers as a result of a new CMS regulation reducing Medicare funding 11.1 percent, Rosenbloom said he wants to ensure today's MedPAC hearing has the proper historical perspective. Noting the SNF economic chaos associated with the 1997 Balanced Budget Amendment (BBA) aftermath, Rosenbloom warns, "This could be a replay of the early phases of the SNF Prospective Payment System (PPS), when roughly 20 percent of nursing facilities filed for bankruptcy, nurse staffing levels plummeted 17-33 percent, and survey deficiencies increased significantly."

SOURCE Alliance for Quality Nursing Home Care

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