As S&P Releases New Warning State Budget Austerity "Here to Stay," Alliance Urges MedPAC to Recognize Medicare-Medicaid Funding Link

As S&P Releases New Warning State Budget Austerity "Here to Stay," Alliance Urges MedPAC to Recognize Medicare-Medicaid Funding Link

WASHINGTON, Jan. 10, 2012 /PRNewswire-USNewswire/ -- With the Medicare Payment Advisory Commission (MedPAC) scheduled to soon issue its formal Medicare funding recommendations to Congress and recent Standard and Poor predictions that austerity will continue to dominate state budget actions, the Alliance for Quality Nursing Home Care (Alliance) called on MedPAC to take into account the adequacy of overall government funding levels when making recommendations for Medicare payments for skilled nursing facility (SNF) care.

"With budget austerity a continuing reality in FY 2013 state budgets, we urge MedPAC Commissioners in the strongest possible manner to take into account the important role Medicare plays in ensuring overall adequate government funding for the skilled nursing patients the government is responsible for funding," said Alan G. Rosenbloom, President of the Alliance. "Because government pays for the care of three of every four patients in SNFs, MedPAC must consider Medicaid's declining ability to fund care as the Commission makes Medicare payment recommendations.  This is important especially in light of a recent Avalere Health survey of SNFs that finds facilities already plan to lay off more than 20,000 workers as a result of a CMS regulation reducing Medicare funding 11.1 percent."

S&P notes that states are making the "difficult transition to a post-stimulus budget environment," and that despite indications of economic recovery in most states through the first two quarters of fiscal 2012, "we believe that economic prospects and federal fiscal consolidation present significant uncertainty that could translate into continued budget austerity."

Rosenbloom's comment regarding the upcoming MedPAC funding guidance comes on the heels of a study by the Moran Company, conducted for the American Health Care Association (AHCA), finding that SNFs nationwide were operating at a margin of 0.75 percent of revenues in 2009. The study also details that proposals calling for a two-year suspension of Medicare market basket (cost of living) adjustments combined with a 25 percent limit on the federal government's coverage of bad debt could result in margins going negative – falling as low as -3.1 percent over a 10-year projection.

SOURCE Alliance for Quality Nursing Home Care

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