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.”

SHN Awards Ad
Advertisement

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.

SHN Awards Ad
Advertisement

NewImage