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Medicare Cuts Pose Disproportionate Threat to Idaho's Rural Seniors, Local Jobs Base
Date:11/16/2007

Analysis of Congressional Budget Office Data Finds Cuts Would Jeopardize Health, Well-Being of Rural Communities

WASHINGTON, Nov. 16 /PRNewswire-USNewswire/ -- As Congress begins to consider possible cuts to seniors' Medicare Part A skilled nursing facilities funding, an analysis of Congressional Budget Office (CBO) data finds five-year $2.7 billion cuts - like those proposed at the onset of the State Children's Health Insurance Program (SCHIP) debate - pose a disproportionate threat to Idaho's rural seniors, and to the jobs and employment base of the state's rural communities. With 66 percent of Idaho's nursing homes located in rural areas, those facilities would face $12.28 per day, per patient, less in Medicare funding for Idaho seniors.

"Medicare cuts would hurt the most vulnerable Idaho citizens," said Joe Rudd, Administrator with SunBridge Rehab and Living Center in Meridian. "Slashing funding would greatly impact our facility and those in rural areas. We work hard to ensure the best quality care for our residents and these cuts would impact skilled nursing facilities across the state. We urge Congress to consider the impact on seniors in Idaho and around the country, and not enact these cuts."

"If Medicare funding is cut by Congress in the manner contemplated, there will be a disproportionate, negative impact on Idaho's rural seniors and the facilities and staff who care for them," warned Bruce Yarwood, President and CEO of the American Health Care Association (AHCA). "In Idaho, as in most rural communities, skilled nursing facilities are not generally within close proximity to one another, and are more widely dispersed geographically. Consequently, rural facilities' ability to hire, train and retain key direct care staff will be severely compromised if Medicare cuts are enacted into law."

Alan Rosenbloom, President and CEO of the Alliance for Quality Nursing Home Care (AQNHC), noted that approximately 70 percent of skilled nursing facility operating costs are staffing-related, and that skilled nursing facilities are playing a growing, important role when it comes to providing the rehabilitative care patients require to return home to active, productive lives in their communities. "Medicare cuts would have a disproportionately negative impact on America's rural facilities, and would make finding and retaining highly-credentialed staff still more challenging in an already difficult environment. Sustaining rural facilities' quality improvement programs would be placed in direct jeopardy to the detriment of every resident."

Rural Seniors Would Shoulder Approximately 25% of Total Five-Year, $2.7 Billion Medicare Cuts

Further analysis of previously-released CBO scoring data finds seniors in rural America would shoulder approximately 25 percent of the total five year, $2.7 billion Medicare cuts - yet in states with higher rural populations, rural seniors and the skilled nursing facilities that serve them would bear disproportionately greater cuts. In particular, Medicare beneficiaries in rural areas requiring skilled nursing care would suffer significant reductions in daily funding.

In addition, the national long term care leaders emphasized, rural facilities would be increasingly forced to choose between the urgent staffing needs that impact quality in the near-term versus refurbishing facilities, upgrading technology, and purchasing new equipment - which impacts future care quality.

Pointing to how Medicare cuts would negatively impact rural America's local economic base, Rosenbloom observed that skilled nursing facilities are often the largest local employer: "America's rural communities depend upon the strength and vitality of local long term care facilities for jobs and economic development, and the negative ramifications resulting from federal Medicare cuts would quickly ripple through the local economic base from the standpoint of lost jobs, less hiring and marginally higher unemployment."

Rural Impact of Medicare Cuts Compounded by Medicaid Rates That Fail to Cover Facility Care Costs

A study released in October 2007 from BDO Seidman/Eljay shows that skilled nursing facilities receive an average of $13.15 less than the cost of care for every day of care provided to a Medicaid patient - resulting in a facility operating loss of $4.4 billion nationwide. Since 1999, the funding gap has grown by 45 percent. As a result, Medicare has provided a funding safety net increasingly essential to preserving access to quality care. The disproportionate negative impact on rural seniors if Medicare cuts are enacted would be exacerbated by the ongoing Medicaid underfunding phenomenon.

In further explaining the role of Medicare in subsidizing Medicaid shortfalls, Joseph Lubarsky, the BDO Seidman/Eljay study author said, "Medicare continues to play an important role in the cross-subsidization of Medicaid deficits... un-reimbursed Medicaid allowable costs are projected to exceed $4.4 billion, and providers must continue to substantially rely on Medicare prospective payment in an attempt to break even from government funded programs. Any major slowdown in state economies or changes in federal policies or interpretations regarding federal revenue enhancement programs could easily reverse the positive trends of the past few years." (To view entire BDO Seidman/Eljay Medicaid Underfunding study, go to http://www.ahca.org).

Rural data methodology note: The data used to compute the rural impact data was analyzed and compiled by the American Health Care Association's (AHCA) Reimbursement and Research Department using CBO data from Preliminary CBO Estimate of the Effects on Direct Spending and Revenues of H.R. 3162; the Children's Health and Medicare Protection Act of 2007 as of July 25, 2007; and Medicare day distribution data from CMS Skilled Nursing Facility 100% claims data from 2005. The AHCA data was further analyzed by United Bio Source (UBS) to compile the PPD rural impact data.


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SOURCE American Health Care Association
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