Medicare payment cuts to nursing homes hit on October 1st

Skilled nursing facilities across the country are bracing for significant reductions in the payments they receive from Medicare.  A new rule issued by the Centers for Medicare and Medicaid Services (CMS) for skilled nursing facility Medicare reimbursement takes effect on October 1^st. 

The nursing home industry has responded to the impending payment reductions with alarm, suggesting that the cuts could result in a loss of jobs and reduced quality of care for nursing home residents.  See, American Health Care Association (for-profit nursing homes), "CMS Issues Final Rule on Medicare Payments to SNFs; Federal Agency Disregards Calls for Phase-In, Drastically Reduces SNF Payments" (Press Release, July 29, 2011); Leading Age (formerly known as American Association of Homes and Services for the Aging, not-for-profit nursing homes), "Medicare Rate Cuts: Shocking, Unfair and Punitive" (August 1, 2011); Alliance for Quality Nursing Home Care (chain nursing homes), "New Medicare Cuts in CMS Final Rule a Clear and Present Danger to SNF Sector Stability, Quality Patient Care, Local Jobs" (Press Release, July 29, 2011).

“Severe cuts in federal Medicare funding threaten Pennsylvania’s already fragile skilled nursing facility sector” according to Stuart Shapiro, MD, President of the PA Health Care Association, a trade group of Pennsylvania nursing homes and other long term care providers. “These cuts, combined with inadequate Medicaid reimbursement, may very soon limit access to Pennsylvania nursing home care, place the quality of care at risk, and jeopardize thousands of health care jobs.”

According to Dr. Shapiro “Pennsylvania’s nursing homes will suffer a nearly $200 million cut in their annual Medicare payments beginning Oct.1 under a new rule announced by the Centers for Medicare and Medicaid Services (CMS). This translates into an 11.1% cut in their basic Medicare rates.”  

The financial stress on nursing homes could be intensified if additional payment cuts result from the Budget Control Act passed by Congress in August and its creation of a Congressional deficit reduction “super-committee.” The “super-committee” could propose further cuts to Medicare and/or Medicaid payments for long term care. Or a 2% payment cut could be automatic if Congress fails to act. See, FAQ: 'Super Committee' Could Have Big Impact On Medicare, Medicaid Spending.

Consumer advocate The Center for Medicare Advocacy (CMA) explains the October 1 change in nursing home payments in a reality check article entitled: “Medicare Reimbursement For Skilled Nursing Facilities Remains High For 2012 Despite Reductions In Overpayments: Advocates Must Be Vigilant to Protect and Promote Quality of Care for Residents.

The CMA suggests that advocates for nursing home residents need to be especially vigilant over the next few months to protect the quality of care provided to residents. According to the Center:

CMS' reduction of overpayments to SNFs [Skilled Nursing Facilities] is one effort to bring down health care costs and to assure that payments are made to health care providers for services that are actually provided, but residents' advocates must assure that care for residents does not decline.  The opportunity for harm to residents is especially significant this year.

SNFs' expenses include expenses that must be paid – mortgage or rent, utilities, taxes – and expenses where SNFs may see flexibility – chiefly staffing, food, and supplies.  Staffing is particularly in danger because of the weak federal standards for nurse staffing.  Federal law requires SNFs, regardless of size, to have one registered nurse on the day shift and licensed and unlicensed nurses 24 hours a day that are "sufficient" to meet residents' needs. This vague standard is difficult to enforce, giving SNFs leeway to staff at low levels, a significant problem when CMS has already documented that more than 90% of facilities nationwide have too few staff to prevent avoidable harm to residents and to meet resident needs.

Advocates may want to closely monitor SNFs' posted staffing levels. Under federal law, SNFs are required to post daily, at the beginning of each shift, the number of licensed nurses (registered nurses, licensed practical or vocational nurses) and unlicensed nursing staff (certified nurse assistants) who are "directly responsible for resident care" as well as the resident census.  Facilities must make the information available to the public in a readily accessible place, and on request, and "must maintain the posted daily nurse staffing data for a minimum of 18 months, or as required by State law, whichever is greater."

Advocates may file complaints with the state survey agency (generally located in the state health department) if staffing levels decline and residents are harmed or are in danger of harm as a result.  They may also encourage CMS to direct surveyors to give special attention to staffing.