Gov. Brown’s Proposal to Cut State Medicaid Funding, Combined with $484 Million in Federal Medicare Reductions, Risks Push

Medicare Regulation in Effect 10/1 Already Places Facility Stability, Patient Care, Jobs at Significant Risk; New Medicaid Cuts in Sacramento Could Induce Dangerous Tipping Point

SACRAMENTO, Calif.--(BUSINESS WIRE)-- With Governor Jerry Brown’s proposed state Medicaid cuts alarming members of the California congressional delegation, a key national long term and post-acute care leader expressed deep concern that the combination of new federal Medicare reductions and new state Medicaid cuts risk pushing California’s skilled nursing facilities (SNFs) over the edge. The Medicare funding reductions, which went into effect October 1, reduced funding for California SNFs, commonly referred to as nursing homes, by $484.3 million in FY 2012 – the highest funding reduction nationally.

Alan G. Rosenbloom, President of the Washington, DC-based Alliance for Quality Nursing Home Care, a coalition of 12 leading post-acute and long term care organizations providing skilled nursing care in approximately 1,400 facilities in 44 states nationwide, including California, stated: “The California SNF sector has the lowest operating margin of all health care providers, and we have deep concern new Medicare funding reductions now in effect – combined with the possibility of new, deep Medicaid cuts in Sacramento – could push California nursing homes over the edge in terms of job losses and a negative impact on patient care.”

He noted that three of every four nursing home patients rely on government funding for their care, and that the negative differential between the cost of providing care and what the California Medicaid system actually reimburses the state’s providers is $11.56 per patient day (Source: Eljay, LLC). “This adds significantly to the worsening pressure on facilities,” Rosenbloom continued. “With both Medicare and Medicaid on the chopping block, our patients, our caregivers and the economic stability of California facilities are at a dangerous tipping point.”

An analysis by Avalere Health finds the new federal regulation from the Centers for Medicare and Medicaid Services (CMS) that went into effect October 1 will reduce Medicare payment to the nation’s nursing home sector by $79 billion over 10 years on a cumulative basis. This new and latest reduction in payments to the sector cumulates on $29.4 billion nationally in Medicare payment cuts enacted to fund healthcare reform, and a $16.8 billion national Medicare payment reduction in other 2010 regulation. While California ranks first in the size of the Medicare funding reduction, the study finds FL ranks second at $447.76 million; TX ranks third at $349.01 million; NY ranks fourth at $321.18 million; and IL ranks fifth at $296.87 million.

“The members of the California congressional delegation warning Governor Brown that new state Medicaid cuts are ‘untenable’ are rightly concerned that still more Medicare funding reductions from Washington stemming from Congressional Super Committee activity would hurt seniors, and undermine facilities’ ability to admit, treat and return to home a rapidly increasing number of patients requiring intensive post-acute rehabilitation,” Rosenbloom said. The Alliance leader said it is critical for state and federal lawmakers alike to keep in mind that SNFs are California’s second largest health facility employer – creating jobs for 179,298 state residents – and that nursing homes generate $17.8 billion in economic activity throughout the state. (Source: Avalere Health)

Rosenbloom warned the recent Standard & Poor warning about increased volatility in the nation’s nursing home sector is a direct result of government payment decisions. S&P, according to news reports this summer, characterized the CMS funding reductions as “larger than expected,” and “ignited worries that reimbursement reductions will impair cash flow prospects.” Concluded Rosenbloom: “The S&P warnings made earlier in the summer should have been heeded, and for the benefit of patients and local jobs preservation, we urge Congress and the President to help bring about payment stability to California’s nursing home sector – not more economic chaos. New Medicaid cuts from Sacramento would make matters far worse.”


Alliance for Quality Nursing Home Care
Rebecca Reid, 410-212-3843

KEYWORDS:   United States  North America  California

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