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New Studies of Bush Administration $770 Million SNF Medicare Cut Find Seniors' Care Jeopardized, Local Jobs Lost, National and State Economies Threatened

National Long Term Care Leaders Warn Illogical CMS Regulatory Action a Serious Public Policy Misstep; Seniors' Nursing Home Benefits Take Biggest Hit in CA, FL, NY, TX, OH, IL, PA, NJ, MI, MA

WASHINGTON, May 13 /PRNewswire-USNewswire/ -- In releasing a new Lewin Group analysis of the Bush Administration's $770 million cut to Medicare-financed nursing home care, national and state long term care leaders warned the regulatory-driven cuts not only jeopardize seniors' access to quality nursing home care -- particularly in rural areas -- but also present a clear and present danger to the U.S. economy and the state and local caregiver jobs base.

During a media teleconference to release the Lewin economic impact data as well as new state-by-state impact analysis from the American Health Care Association (AHCA), Al Dobson, a Lewin Group consultant, said the so-called "Forecast Error" rule proposed on May 1, 2008 by the Centers for Medicare and Medicaid Services (CMS) represents a net negative total economic impact of $4.5 billion for FY 2009. In addition, the data finds, the $770 million decline in revenue will impact approximately $1.8 billion in wages, 43,530 jobs and approximately $661 million in federal, state and local tax revenue in the first year.

"In rural communities, where nursing homes are among the largest employers, the negative economic effects would be particularly damaging," Dobson observed. "Policymakers must understand and reconcile the dual dimensions of these Medicare cuts in that they not only directly impact seniors' access to quality nursing home care, but also have a negative ripple effect throughout our national, state and local economies."

First Year Economic Impact of $770 million Medicare Nursing Home Payment Cutback on the U.S. Economy:

Direct Indirect Induced Total



Impact ($) $770,000,000 $458,953,536 $3,295,406,468 $4,524,360,004


Impacts ($) $480,247,872 $141,926,326 $1,156,905,124 $1,779,079,322


Impacts (jobs) 15,607 3,469 24,454 43,530

State & Local

Tax Revenue ($) $230,915,715

Federal Tax

Revenue ($) $430,426,858

Source: The Lewin Group analyses of the IMPLAN model.

Direct effect represents the impact (e.g. change in employment or

revenues) for the expenditures and/or production values specified as

direct final demand changes.

Indirect effect represents the impact (e.g. change in employment) caused

by the iteration of industries purchasing from industries resulting from

direct final demand changes.

Induced effect represents the impacts on all local industries caused by

the expenditures of new household income generated by the direct and

indirect effects of direct final demand changes.

Total effect is the sum of the direct, indirect and induced effects.

(1) 42 CFR Part 413, Department of Health and Human Services, Centers for Medicare and Medicaid Services, Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2009, p. 29-31.

A complete copy of the Lewin Group analysis can be found at and

Bruce Yarwood, President and CEO of AHCA, also said a separate analysis of the $770 million CMS Medicare cuts finds the regulatory changes will incur an $11.12 per patient day (PPD) cut in Medicare-financed nursing home care nationally, and will have the most significant negative impact on seniors in California, Florida, New York, Texas, Ohio, Illinois, Pennsylvania, New Jersey, Michigan and Massachusetts. The analysis, computed by the AHCA Reimbursement and Research Department using Office of Management and Budget (OMB) data from the Bush Administration's FY 2009 Budget and the Centers for Medicare & Medicaid Services (CMS), finds the following:

Rank State Total Reduction (Millions) Per Patient Day

#1 California $64.9 $13.69

#2 Florida $62.3 $11.66

#3 New York $50.0 $11.12

#4 Texas $47.0 $10.34

#5 Ohio $44.8 $10.92

#6 Illinois $42.2 $11.09

#7 Pennsylvania $36.2 $10.66

#8 New Jersey $34.6 $13.09

#9 Michigan $28.7 $11.20

#10 Massachusetts $27.1 $12.01

U.S. Total $770 $11.12

"In addition to the negative impact the CMS policy will have on our economy and employment base, the regulatory changes will severely undermine the growing complex health care needs of America's oldest, sickest seniors," Yarwood continued. "The more lawmakers on both sides of the aisle learn about the nature and negative impact of the Bush Administration's regulatory changes, especially as they relate to how it impacts their states' seniors, the more we predict they will seek to halt them."

Alan Rosenbloom, President of the Alliance for Quality Nursing Home Care, said the CMS rule "will unquestionably undermine our profession's long-standing goals of increased efficiency and effectiveness -- which benefits nursing home patients, our caregiver workforce, and taxpayers alike." In moving forward with these regulatory cuts, he continued, "CMS fails to factor-in important changes in Administration-initiated Medicare policies that, as intended, are successfully and intelligently moving large numbers of high acuity patients into skilled nursing facilities. These patients would otherwise have been cared for in a higher-cost setting -- which is completely at odds with the Medicare modernization efforts America needs and that seniors deserve." Rosenbloom said the policies now in effect saved Medicare $709 million in 2006 alone, according to a previously-released study by Avalere Health, LLC.

Yarwood and Rosenbloom argued that as the nature of the nursing home patient population continues to change and evolve, it should be the policy of the federal government to help facilitate the ability of nursing homes to accommodate the care needs of higher-acuity, post-acute Medicare beneficiaries.

Tony Marshall, Senior VP & COO of the Florida Health Care Association (FHCA) in Tallahassee, FL, said the CMS action to cut Medicare-financed nursing home care will be especially damaging to seniors in states like Florida, who, he says, have just endured substantial Medicaid funding cuts as a result of recent state legislative actions. "As a result of the CMS policy change, Florida seniors are facing the second highest Medicare funding reduction in the nation -- on top of the state Medicaid cuts passed into state law in recent weeks," Marshall said. "Medicare and Medicaid funding are inextricably linked. The combination of cuts to both programs squeezes facilities in a manner harmful to older residents' rising care needs, as well as to our local economy and caregiver jobs base."

Yarwood and Rosenbloom also noted that a diverse group of lawmakers -- Senators Pat Roberts (R-KS), Ron Wyden (D-OR) and Debbie Stabenow (D-MI) -- are leading the effort on Capitol Hill to reverse the proposed CMS policy. The text of the separate Roberts, Wyden and Stabenow letters are available at

SOURCE The Alliance for Quality Nursing Home Care; AmericanHealth Care
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