Updated: AARP, Senior Care Industry Blast Obama’s Medicare Budget Cuts

Even after steep cuts to skilled nursing facility reimbursements that went into effect last October, President Obama’s 2013 Federal Budget calls for still more Medicare payment and reimbursement reductions, causing associations representing the skilled nursing and home healthcare industries to blast back against the Administration’s strategy of “cuts only” without reforms.

The budget report proposes adjusting payment updates for certain post-acute care providers (such as skilled nursing facilities), equalizing payments for certain conditions commonly treated in skilled nursing facilities, and adjusting skilled nursing facility payments to reduce unnecessary hospital readmissions, saying that these policies will save approximately $63 billion in the next 10 years.

The report also points out that Medicare beneficiaries don’t currently make copayments for home health services, and proposes creating a copayment of $100 per home health visit when there are five or more visits that haven’t been preceded by a hospital or other inpatient post-acute stay. This would begin in 2017 for new beneficiaries, and is expected to save approximately $350 million throughout a 10-year timeframe.


Skilled Nursing and Assisted Living

This “cuts only” approach with no reforms is wrong, says the American Health Care Association/National Center for Assisted Living (AHCA/NCAL).

“Our organization’s approach has been to work with the Administration and Congress to improve the lives and care delivery while at the same time working to remove costs out of the system,” said Mark Parkinson, President and CEO of AHCA/NCAL. “We do that by reducing hospital readmissions, placing seniors in the most appropriate health settings, and redoubling our efforts on quality. We shouldn’t have an approach focused solely on cuts. Unfortunately, the President’s budget reflects that singular direction.”


This sort of budgeting “violates the basic contract between the government and beneficiaries” that covered services will be paid, he said.

“Medicare and Medicaid funding for senior health care should be fully paid for. We want to and will work with both parties and this administration to meet the commitments we made years ago to the Greatest Generation and their families,” said Parkinson, mentioning his association’s recommendations for an alternative to reducing Medicare reimbursements.

For its part, the Alliance for Quality Nursing Home Care also decried Obama’s budget.

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“With America’s skilled nursing facility sector already slated to absorb $127 billion in Medicare reductions over the FY 2012-2021 budget window, any additional direct payment cuts in the FY 2013 federal budget will further jeopardize seniors’ access to quality care, worsen facility job losses, and risk pushing America’s second largest health facility employer over the edge,” said Alan Rosenbloom, present of the Alliance.

Home Health Care

Cuts to home healthcare will limit patient access to “clinically advanced, cost-effective care that an overwhelming majority of American seniors prefer,” says the Partnership for Quality Home Healthcare.

Instead of across-the-board Medicare cuts, the Medicaid and Medicare programs should be strengthened through integrity reforms, says the healthcare group.

“Simply put, there’s a better way to save money than by increasing costs on America’s seniors and endangering the high-quality, low-cost services they need. That’s why many lawmakers prefer program integrity reform, like the home healthcare community’s detailed proposal, because it generates billions in savings without harming innocent seniors or cost-efficient providers,” said Billy Tauzin, former House Energy Commerce Committee chairman and senior counsel to the Partnership for Quality Home Healthcare, in a statement.

The home healthcare community proposed payment reforms in 2009 that achieved nearly $1 billion in Medicare savings in 2010 alone, according to data from the Centers for Medicare & Medicaid Services (CMS)—equivalent to nearly $11 billion of savings in the next 10 years.

Armed with this data, the group believes this policy is evidence that “targeted program integrity reform can generate significant savings without impacting beneficiaries or cost-efficient providers.”

“We as Congress to strongly consider the solutions the home healthcare community has put forth, which achieve significant savings and delivery system improvements without asking our nation’s sickest and poorest seniors to shoulder the burden of an expensive copayment, which many patients simply cannot afford,” said Senator John Breaux (D-La.) in a statement.

Update: AARP Adds Critique to Budget

AARP also weighed in with a response to President Obama’s budget, saying that proposals that shift healthcare costs onto seniors should be rejected.

“AARP recognizes the economic challenges faced by the nation, including rising costs throughout the health care system that routinely outpace inflation. While AARP supports efforts to reduce health care costs, we oppose proposals that would either shift costs to seniors or simply reduce the hard-earned Medicare benefits that millions of seniors depend upon every day for their health security. It is neither balanced nor fair to ask seniors, whose median annual income is less than $20,000, to contribute even more for their health care. The typical senior already pays nearly 20 percent of their income on health care.

AARP urges the President and Congress to first address high system-wide health care costs – which drive increases in Medicare and Medicaid—by improving the health care delivery system. We must first focus on reducing waste, fraud, and inefficiency—rather than reducing the benefits Americans have earned after decades of working hard and paying into the system.”

Rather than just trying to save money through cuts on Medicare and Medicaid, says the organization, it’s important to “improve the delivery of health care generally, including better coordination of care, better use of health information technology, lowering the cost of prescription drugs, and reducing waste and fraud throughout the entire health care system.”

Written by Alyssa Gerace

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