Our Message to Congress: Medicare and Medicaid Nursing Facility Funding

Nursing Facilities Can Not Absorb Additional Medicare and Medicaid Cuts; Support H.R. 1543 & S. 818 and Allow Seniors to Keep Their Eligibility Benefits for Medicare Nursing Facility Stays

Congress has been making strides in its efforts to reform the health care delivery system: identifying and reducing waste and fraud, improving the quality of care provided to patients, better integrating health services, improving a patient’s experiences and care outcomes while transitioning between varying levels of health and long-term care and preventing unnecessary, costly hospitalizations and re-hospitalizations.

Long term care and senior supportive services are essential foundational elements of a functional health care system.They support a vulnerable, frail elderly population that is often affected by physical and cognitive losses and have as sole resources their Social Security and/or retirement income.

State and federal health care and aging services policies must holistically anticipate and accommodate:

• A growing aging population with a corresponding increase in the need for elder care and services;
• The substantial impact of diabetes, obesity and other chronic illnesses on the frailty of seniors requiring long term care and service supports;
• The essential and changing role of nursing facilities in effectively caring for higher acuity elders in sub-acute settings, reducing unnecessary emergency room visits and hospitalizations;
• The cost-effectiveness, and consumer preference, of senior supports delivered in a person’s home. 

These initiatives will generate short and long term savings to the health care system generally and to Medicare and Medicaid specifically.

Medicare pays 25% of the total cost of nursing facility and facility health care.

• The Affordable Care Act curbed the growth of Medicare spending on nursing facility care by $14B over the next ten years.
• A Medicare payment rule which took effect on October 1, 2011 reduced nursing facility payments across the board by an average of 11.1%. This same rule significantly altered therapy services billing parameters and may result in revenue losses of 20% for some Washington state nursing facilities.
• The Budget Control Act of August 2, 2011, creating a “super-committee”, may result in even greater losses: 1) Cutting Medicaid through block grants, a blended federal matching rate or 2) a 2% Medicare payment cut if automatic spending cuts go into effect.

Medicare must continue to cover needed nursing facility therapy and rehabilitation care after an elder leaves the hospital. A technicality in current law takes away this benefit if a patient is held in ‘observation status’ by a hospital, rather than being formally admitted, for short term acute care. Both observation and admission stays in a hospital must trigger eligibility for a Medicare covered stay in a nursing facility.

• Representative Jay Inslee is a co-sponsor of H.R. 1543 which restores needed Medicare coverage for nursing facility intensive medical and rehabilitative care. Accomplishing the same goal is S. 818, sponsored by Senator John Kerry (D-MA).

Medicaid is the largest single payer for nursing facility care. Federal and state Medicaid cuts have created significant challenges for nursing facilities, compounding existing and impending cutbacks in Medicare.

• Washington state nursing facilities receive, on average, 20% less from Medicaid than what it costs to provide resident care and services;
• The cumulative costs of increases in liability insurance, employee health and retirement benefits, greater clinical care needs of residents and additional regulatory requirements have not been offset by corresponding Medicaid rate increases since 2007;
• The state is currently proposing an additional 2.5% nursing facility rate cut and a change in Medicaid eligibility requirements to eliminate services for 5%, or 500, nursing facility residents through FY13.