Proposals to Cut Medicare Funds for SNF Bad Debt Ignore Crucial Fact: Medicaid Overwhelmingly Accounts for Unpaid Health Care Bills for Dual Eligible Patients

Medicaid's Failure to Cover Required Co-Payments Produces 85 Percent of SNF Bad Debt

WASHINGTON, Oct. 24, 2011 /PRNewswire-USNewswire/ -- The Obama Administration's proposal to cut Medicare bad debt payments for skilled nursing facility (SNF) care is "unfair and unsustainable," the Alliance for Quality Nursing Home Care said today. According to the Alliance, 85 percent of SNF bad debt is unrecoverable because it stems from Medicaid's inability or unwillingness to pay Medicare co-payments for dual eligible patients.

Medicare currently reimburses SNFs for 100 percent of bad debt from dual eligibles because federal law prevents SNFs from collecting these payments from beneficiaries, most of whom are poor and do not have the means to pay. At the same time, however, the law fails to require state Medicaid programs to pay either.

"The Administration's bad debt proposal disregards the fact that Medicaid programs are the primary source of SNF bad debt," said Alan G. Rosenbloom, President of the Alliance, a coalition of 12 leading post-acute and long term care organizations providing SNF care in approximately 1,400 facilities in 44 states nationwide. "SNFs cannot as a matter of federal law collect any bad debt associated with care for dual eligible patients, but Medicaid doesn't pay these bills either. So, if the Administration's proposal becomes policy, SNFs would be left 'holding the bag' for these unpaid bills."

The Alliance leader noted:

• Federal law exempts duals from paying Medicare co-payments and deductibles and also allows state Medicaid programs to opt-out of making these payments on behalf of duals;
• 85 percent of SNF bad debt is related to dual eligibles;
• SNFs are unlike other health care providers when it comes to bad debt. While 85 percent of SNF bad debt is attributable to federal policies regarding duals, 55 percent of hospital bad debt is attributable to these policies.

Rosenbloom added, "SNFs cannot refer a state Medicaid program to a collection agency, and lowering Medicare bad debt payments to 25 percent will not spur SNFs to be more aggressive in their debt collection efforts. The simple fact is that bad debt attributable to Medicaid non-payment is truly uncollectible."

Medicare funding for SNF care has been cut by $65 billion over the next 10 years, and state budget problems are forcing most states to cut or freeze Medicaid payments for nursing home care. Said Rosenbloom, "More Medicare cuts will threaten the very viability of SNFs, which are already the nation's lowest margin provider."

SOURCE Alliance for Quality Nursing Home Care

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