Senior Care Industry: Supercommittee Failed, But Deeper Cuts Still Preventable

The Joint Select Committee on Deficit Reduction may have failed at their task of creating a deficit reduction plan, but that doesn’t mean those in the senior housing and care industry are going to sit back and wait for the automatic 2% cuts.

The industry has been waiting to see what would come of the so-called Supercommittee’s efforts to reduce the federal deficit by $1.2 trillion over the next ten years, as the Medicare program was liable to come under the microscope. While Medicaid and Social Security are exempt from the across-the-board cuts, Medicare healthcare providers could see cuts of up to 2%, on top of the previously implemented 11.1% reduction in reimbursement rates.

The committee announced their failure to reach an agreement on Monday, shortly before its November 23 deadline, triggering automatic cuts and prompting a variety of responses from senior-related groups.


Congress and the Obama Administration should continue their efforts to reduce the federal budget gap, says LeadingAge.

“Automatic spending cuts mandated by the Budget Control Act do not go into effect until 2013,” the group said in a statement. “In the meantime, Congress and the Administration still have to work out the regular 2013 budget and spending process, which they could use to address the budget deficit and prevent sequestration.”

Reforms to the healthcare system and Medicare under the Affordable Care Act are projected to reduce the growth of Medicare spending by $500 billion in the coming decade, said LeadingAge, adding, “This is the right way to rein in excessive spending.”


“We cannot cut our way out of this budget hole, but we must innovate our way out,” the statement read.

The American Health Care Association (AHCA) agreed, saying in its statement that further actions must be taken to address spending issues.

The healthcare sector is already struggling from previous reductions to both Medicare and Medicaid, said AHCA’s president and CEO, Mark Parkinson.

“This is a plan that goes to far,” he said. “That’s why in the coming weeks we will continue to support a more methodical, long-term solution to our nations rising health care costs and growing deficit.”

AHCA is creating a proposal that it says would reduce Medicare costs for post-acute care and “encourage skilled nursing facilities to reduce $5 billion worth of hospital readmissions over ten years.” The association said in its statement that Congress and the Administration should seriously consider this proposal, “so that we can address spending issues head on while still protecting access to care for millions of seniors.”

A spokesperson for AHCA said they are wrapping up the proposal, although no details are available yet.

The Alliance for Quality Nursing Home Care has previously announced an initiative to save Medicare dollars by reducing rehospitalizations from nursing homes, with financial disincentives to facilities with higher-than-average readmission rates.

Prior to the announcement of the Supercommittee’s failure, the Alliance released a statement detailing its opposition to further cuts to the skilled nursing industry, which “is already slated to absorb a staggering $127 billion in Medicare funding cuts and reductions in the FY 2012-21 budget window due to legislative and regulatory changes over the past five years.”

“Our sector is increasingly concerned that any further direct payment reductions or beneficiary changes will significantly impact seniors’ access to quality care,” said Alan Rosenbloom, president of the Alliance.

The group opposed legislative or regulatory changes that would “adversely impact nursing home payments,” and also disapproved of additional Medicare market basket reductions and increases in Medicare co-payments for Medicare beneficiaries in SNFs.

“Because roughly 70% of SNF patients are paid for by government programs (57% Medicaid plus 14% Medicare), the combined impact of Medicare and Medicaid cuts is pushing overall SNF operating margins below 1% now–before any additional policy changes or payment reductions are considered,” said Rosenbloom.

The Alliance declined to give comment after the Supercommittee’s failure was announced.

Written by Alyssa Gerace

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