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MedPAC Again Fails to Evaluate Overall Economic Conditions in Assessing SNF Funding Requirements
Date:12/7/2007

New NGA Report on Worsening State Budget Picture, Ongoing Medicaid Funding Crisis Cited

WASHINGTON, Dec. 7 /PRNewswire-USNewswire/ -- Commenting on the Medicare Payment Advisory Commission's (MedPAC) draft recommendation that skilled nursing facilities (SNFs) should receive no inflationary market basket update for 2009, the Alliance for Quality Nursing Home Care said MedPAC's evaluation is "incomplete and far off the mark" in terms of providing Congress with the overall economic picture it needs to make sound budgetary decisions directly impacting the care and well being of the nation's most vulnerable seniors, and the direct care workers who serve them.

"When assessing the adequacy of Medicare funding for the nation's nursing home residents, and making subsequent recommendations to Congress, MedPAC should be obligated as a matter of basic responsibility to consider the overall economic conditions in which the sector operates," stated Alan G. Rosenbloom, President of the Alliance. "Medicaid pays for nearly two thirds of patients in America's nursing homes, and consistently pays less than the actual cost of care," he continued. "Adequate Medicare payments are essential to maintaining the financial stability essential to ensure the quality of care provided to millions of seniors is optimal."

MedPAC, in making its draft recommendation, acknowledged the shortfall in Medicaid funding and the fact that overall operating margins for nursing homes are low, but nonetheless based its recommendations exclusively on Medicare performance. According to a study by BDO/Seidman recently released by the American Health Care Association, the Medicaid program pays some $4.4 billion less than the actual cost of nursing home care for the nation's seniors. This translates into $13.15 per patient per day less than the cost of care, an amount which has increased 45% since 1999.

"By failing to include consideration of substantial Medicaid payment shortfalls to nursing homes in formulating its recommendations, MedPAC gives Congress and the public a flawed basis on which to determine the best policy -- not only for the Medicare program but, more importantly, for America's seniors and the workers who provide their care," Rosenbloom said.

With as much as 70% of nursing home operating costs driven by labor costs, inadequate overall funding may force nursing homes to make difficult decisions that could affect the hundreds of thousands of direct care workers in nursing homes - 86% of whom are women, and 30% of whom are minorities. "If the direct care work force becomes destabilized because nursing homes don't have the resources to make ends meet," he continued, "it is the patient who may suffer the most."

Rosenbloom also noted that the National Governors Association's (NGA) recent report that many states are facing budgetary shortfalls due to rising health care costs and the housing crisis strongly suggests that shortfalls in Medicaid payments could worsen. The report, released Wednesday, notes states are feeling pressure on both the revenue and spending sides of the ledger, and some states are already dipping into Rainy Day accounts to help make up the difference.

"When state revenues drop, the Medicaid program in general - and payments to nursing homes in particular - often face the budgetary axe," Rosenbloom continued. "Besides ignoring the new NGA report predicting a softening state budget fiscal picture, MedPAC has once again turned a blind eye towards substantial, ongoing Medicaid losses in determining the financial health of the nursing home sector. Therefore, MedPAC's recommendations offer little practical guidance to Congress concerning the impact Medicare policy will have on the quality of care provided to America's nursing home patients."

The Alliance President also said: "When pronouncing Medicare margins for the various health sectors, MedPAC should be obligated to evaluate the real and growing interdependence between Medicare and Medicaid. Substantial Medicaid losses offset Medicare gains, and the result is that overall operating margins for America's nursing homes hover close to 3% -- far less than those of any other group of health care providers."

Concluded Rosenbloom, "While MedPAC has opted to ignore both the broader marketplace realities and the looming impact of adverse state budget trends, we believe Congress should take a more expansive view to assure the stability of the direct care work force and the quality of care for all nursing home patients."


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SOURCE Alliance for Quality Nursing Home Care
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