MedPAC 'doc fix' could undermine seniors' care, jeopardize local jobs, and destabilize key health sector

Commenting on an initial outline from the Medicare Payment Advisory Commission (MedPAC) to address the sustainable growth rate formula used to fund physicians, the Alliance for Quality Nursing Home Care said news reports of proposed Medicare cuts of $49 billion over ten years for post-acute care providers -- on top of the many cuts already in effect -- would severely undermine seniors' care, jeopardize local jobs, and further destabilize a key U.S. health sector already reeling from a series of budgetary and regulatory actions.

"While we fully appreciate the need to correct problems in the Medicare payment system for physicians, we are deeply concerned that this MedPAC outline to address the so-called 'doc fix' disproportionately targets the SNF sector -- and the net impact of these proposed Medicare cuts would place seniors' care at deep risk, jeopardize jobs across America, and further destabilize the nation's second largest health facility employer," warned Alan G. Rosenbloom, President of the Alliance. Noting that four of every five SNF patients are paid for by Medicare or Medicaid, Rosenbloom continued,  "as we have in the past, we will continue to insist today that the U.S. Congress should make its Medicare funding decisions based upon the complete set of funding variables and economic realities facing skilled nursing facilities, our patients and our workforce. This MedPAC outline inherently fails to recognize these realities."

Over the past several years, the Alliance leader pointed out, the federal government has implemented a series of reductions in Medicare payments to SNFs that will lower payments by more than $125 billion in the FY 2012-21 period, and which is contributing to severe sector instability.  Specific changes and funding challenges include:

• FY 2010 CMS Rule. Estimated decrease of $16.8 billion over 10 years (FY 2012-2021) from the 3.3 percent forecast error (i.e., case mix) adjustment in FY 2010.
• Federal Health Reform. Estimated decrease of $29.4 billion over 10 years from productivity adjustments/reductions in the market basket (inflation) update starting in FY 2012.
• 2010 Regulation. Estimated decrease of $2.6 billion over 10 years from the 0.6 percent forecast error cut in the market basket update for 2011.
• FY 2012 CMS Rule. Estimated decrease of approximately $60 billion over 10 years from the 11.1 percent RUG recalibration/parity adjustment and an estimated decrease of at least another $19 billion over 10 years from changes to payments for therapy services (at least an additional 3.5 percent cut in Medicare).  The $19 billion, in particular, represents actual reductions in Medicare payments for beneficiary services, not merely correcting for an "inadvertent overpayment" by CMS.  
• Medicaid Cuts. The deteriorating economic conditions across the country also have led to significant reductions in Medicaid payments to nursing homes, compounding the risk to providers, employees and patients.  For example, Florida and Ohio have cut Medicaid payments to nursing facilities by six to seven percent already this year.

Rosenbloom urged Congress to protect hard-won quality gains for Medicare beneficiaries, preserve good local health jobs, and to provide badly needed stability to a sector hurt by a confluence of policy changes and payment cuts.  The Alliance leader also called attention to the difficult and deteriorating Medicaid funding situation, which in most states does not provide funding levels sufficient to cover the cost of quality care for two out of every three patients.  In fact, the situation has worsened dramatically in several states this year alone.  For example, both Ohio and Florida nursing facilities have sustained 6% cuts in Medicaid payments, on top of the cascade of Medicare cuts over the past several years.  

The Alliance expects to release a more thorough treatment of the MedPAC proposal as additional details emerge.