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New National Study Spotlights Importance of Federal Medicare Funding to Propping-Up Seniors' Deteriorating State Medicaid Benefits and Services
Date:12/8/2009

Amid Historic Recession and State Fiscal Crises, Analysis Finds $4.7 Billion Gap Between Medicaid Payments and Actual Seniors' Care Costs

WASHINGTON, Dec. 8 /PRNewswire-USNewswire/ -- Highlighting the importance of robust federal Medicare funding for seniors and the long-term care providers they depend upon, a new Eljay LLC analysis of the nation's deteriorating Medicaid financing system projects states will cumulatively under fund the actual cost of providing quality long-term care by nearly $4.7 billion for 2009. In the context of ongoing health care reform, the Chair of the American Health Care Association (AHCA) said adequate Medicare funding in a final bill is "a literal lifeline" to the nation's oldest, most vulnerable seniors.

"As the already vast gap between the actual cost of providing quality eldercare and what the Medicaid program actually finances continues to grow, Medicare-funded nursing home care increasingly serves as a literal lifeline to providers and the 1.7 million U.S. seniors under our care," stated Robert Van Dyk, the AHCA Chair. "With so many of the nation's Governors forced to freeze or cut vulnerable seniors' Medicaid benefits and services due to catastrophic budget shortfalls - projected to grow still worse - ensuring robust Medicare funding in a final health reform bill is increasingly critical."

Van Dyk praised House Speaker Nancy Pelosi (D-CA) and other key leaders for recognizing and beginning to act upon the Medicaid funding crisis plaguing seniors' eldercare needs. "The Nursing Facility Supplemental Payment Program contained within the Affordable Health Care for America Act (H.R.3962), represents a first step in acknowledging the nation's chronic Medicaid underfunding crisis - which we now know shortchanges seniors' nursing home care more by nearly $4.7 billion annually." He continued, however, to express concern with the level of cuts to Medicare-funded nursing home care in the House bill - $23.9 billion over ten years - in light of both the growing dependence upon Medicare to prop-up Medicaid, and the fact that Medicare cuts of up to $16 billion were just put into effect on October 1, 2009.

The AHCA Chair also commended U.S. Senator Ron Wyden (D-OR) for working to include a key provision in the Senate health reform bill Patient Protection and Affordable Care Act (H.R. 3590) that will help get to the root of the decade-long Medicaid under funding crisis: a provision to require the Medicare Payment Advisory Committee (MedPAC) to review and report on Medicaid funding when making recommendations about Medicare payments. "Both the Wyden Amendment and the Nursing Facility Supplemental Payment Program in the House bill are solid, smart public policy initiatives that merit inclusion in a final health reform bill."

The largest payer for long-term care in the nation, Medicaid pays for more than two-thirds of skilled nursing facility patient-days annually. Each state sets a daily care reimbursement rate ostensibly tied to the "allowable costs" of providing care in that state - costs such as 24-hour nursing care; three meals per day with important dietary supplements; other essential care services for grooming, personal care, bathing, and eating; medical supplies such as beds and wheelchairs; social activities, and more in a number of states.

Key findings of the new Eljay LLC Medicaid report are as follows:

  • The average shortfall in Medicaid nursing home reimbursement is projected to be $4.7 billion for 2009, or, $14.17 per Medicaid patient day.
  • Medicare continues to play an important role in the cross-subsidization of Medicaid deficits. According to the Medicare Payment Advisory Commission or MedPAC, the average margin on Medicare payment to nursing homes in 2007 was 14.5% while our analysis indicates a 9.0% shortfall on Medicaid payment for that year. The weighted average 2007 margin from the two government funded programs combined is a negative 1.2%.
  • The Medicaid reimbursement outlook for 2010 and 2011 is bleak. It is worse than any other year in the last seven in which this annual Report has been compiled due to unprecedented state budget deficits and expiration of federal stimulus funds at the end of 2010.
  • In 2009, for every dollar of allowable cost incurred for a Medicaid patient, the Medicaid program reimbursed, on average, approximately 92 cents.
  • States continue to rely heavily upon provider taxes to fund nursing home reimbursement. However, most states with provider taxes chose not to increase nursing home reimbursement nor lower the provider tax rate as a result of a temporary higher federal match rate on these tax funds under the American Recovery and Reinvestment Act of 2009 (ARRA). Instead, the savings from a higher federal match rate on provider tax funds appears, in most states, to have gone to subsidize state budget deficits.
  • States continue to redirect more of their long-term care budgets to non-institutional services. This heightened competition among long-term care programs for limited state resources combined with sagging state economies has dampened 2010 Medicaid rate increases. This negative trend will likely continue in 2011 as the economic outlook for states remains bleak and because of the expiration of the higher temporary ARRA federal match rates (FMAP) as of January 1, 2011.

SOURCE American Health Care Association


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SOURCE American Health Care Association
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