CMS Cuts will Reduce Payments to Skilled Nursing Facilities by $79 Billion
The Centers for Medicare and Medicaid Services’ (CMS) decision to cut payments to skilled nursing facilities by $3.87 billion in fiscal year 2012 will have significant negative economic impact on many of the nation’s states, according to a new report funded by the Alliance for Quality Nursing Home Care (AQNHC).
Conducted by Avalere Health, the report finds that the CMS cuts will reduce Medicare payments to skilled nursing facilities by $79 billion over 10 years and slash economic activity by $6.75 billion in FY 2012. Dan Mendelson, CEO of Avalere, says Medicaid is impositing significant strain on the sector, which has already seen payment reductions of roughly six to seven percent in states like Florida and Ohio.
“Nursing homes are operating in an extremely difficult environment,” he said. “In the long term, there is concurrence among policymakers that SNFs hold the key to better patient management and cost reduction, but in the short term, these pressures on Medicare and Medicaid rates will be exceedingly difficult to manage.”
The CMS decision went well beyond the cautious correction urged by a bipartisan group of House and Senate members according to Alan G. Rosenbloom, President of AQHNC.
“By adding substantial changes in payment methodology for therapy services, CMS also crossed the line from over-correction into real Medicare cuts,” Rosenbloom said. “These new Medicare cuts—above and beyond a payment correction we ourselves concurred was necessary—will contribute to destabilizing America’s second largest health facility employer and the substantial economic activity facilities generate nationally and at the state level,” he warned.
According to the report, states like California and Florida will be impacted most by the payment reductions. California is estimated to lose more than $660 million in economic activity as a result of the changes, and Florida is likely to see a loss of more than $562 million from the changes in 2012.
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I wonder if dividends and/or profit are considered to be "economic activity"? Some nursing home chains have reported net profits of 25% in 2010 and early quarters of 2011.
This "cut" in increases of funding, for that is what it is, a cut in increases, is designed to bring profits to a more reasonable level. The 2010 rate was set in an effort to ensure that that nursing homes did not suffer when RUGs IV was implemented. It was based on the assumption that nursing homes would continue to behave as they were behaving when the 2010 rate was set, but nursing homes found new ways to create even more profit and RUGs IV was not a problem, but a profit.
You and I are footing the bill for nursing home profits with our tax dollars.
In some cases, these funds may be supporting other departments of a hospital such as emergency rooms, labs, radiology, and acute floors. These cuts will force the closure and consolidation of many hospitals that rely on this for survival.