MedPAC Again Fails to Evaluate Overall Economic Conditions in Assessing SNF Funding...

MedPAC Again Fails to Evaluate Overall Economic Conditions in Assessing SNF
Funding Requirements

New NGA Report on Worsening State Budget Picture, Ongoing Medicaid Funding
Crisis Cited

WASHINGTON, Dec. 7 /PRNewswire-USNewswire/ -- Commenting on the Medicare
Payment Advisory Commission's (MedPAC) draft recommendation that skilled
nursing facilities (SNFs) should receive no inflationary market basket update
for 2009, the Alliance for Quality Nursing Home Care said MedPAC's evaluation
is "incomplete and far off the mark" in terms of providing Congress with the
overall economic picture it needs to make sound budgetary decisions directly
impacting the care and well being of the nation's most vulnerable seniors, and
the direct care workers who serve them.

"When assessing the adequacy of Medicare funding for the nation's nursing home
residents, and making subsequent recommendations to Congress, MedPAC should be
obligated as a matter of basic responsibility to consider the overall economic
conditions in which the sector operates," stated Alan G. Rosenbloom, President
of the Alliance. "Medicaid pays for nearly two thirds of patients in America's
nursing homes, and consistently pays less than the actual cost of care," he
continued. "Adequate Medicare payments are essential to maintaining the
financial stability essential to ensure the quality of care provided to
millions of seniors is optimal."

MedPAC, in making its draft recommendation, acknowledged the shortfall in
Medicaid funding and the fact that overall operating margins for nursing homes
are low, but nonetheless based its recommendations exclusively on Medicare
performance. According to a study by BDO/Seidman recently released by the
American Health Care Association, the Medicaid program pays some $4.4 billion
less than the actual cost of nursing home care for the nation's seniors. This
translates into $13.15 per patient per day less than the cost of care, an
amount which has increased 45% since 1999.

"By failing to include consideration of substantial Medicaid payment
shortfalls to nursing homes in formulating its recommendations, MedPAC gives
Congress and the public a flawed basis on which to determine the best policy
-- not only for the Medicare program but, more importantly, for America's
seniors and the workers who provide their care," Rosenbloom said.

With as much as 70% of nursing home operating costs driven by labor costs,
inadequate overall funding may force nursing homes to make difficult decisions
that could affect the hundreds of thousands of direct care workers in nursing
homes - 86% of whom are women, and 30% of whom are minorities. "If the direct
care work force becomes destabilized because nursing homes don't have the
resources to make ends meet," he continued, "it is the patient who may suffer
the most."

Rosenbloom also noted that the National Governors Association's (NGA) recent
report that many states are facing budgetary shortfalls due to rising health
care costs and the housing crisis strongly suggests that shortfalls in
Medicaid payments could worsen. The report, released Wednesday, notes states
are feeling pressure on both the revenue and spending sides of the ledger, and
some states are already dipping into Rainy Day accounts to help make up the
difference.

"When state revenues drop, the Medicaid program in general - and payments to
nursing homes in particular - often face the budgetary axe," Rosenbloom
continued. "Besides ignoring the new NGA report predicting a softening state
budget fiscal picture, MedPAC has once again turned a blind eye towards
substantial, ongoing Medicaid losses in determining the financial health of
the nursing home sector. Therefore, MedPAC's recommendations offer little
practical guidance to Congress concerning the impact Medicare policy will have
on the quality of care provided to America's nursing home patients."

The Alliance President also said: "When pronouncing Medicare margins for the
various health sectors, MedPAC should be obligated to evaluate the real and
growing interdependence between Medicare and Medicaid. Substantial Medicaid
losses offset Medicare gains, and the result is that overall operating margins
for America's nursing homes hover close to 3% -- far less than those of any
other group of health care providers."

Concluded Rosenbloom, "While MedPAC has opted to ignore both the broader
marketplace realities and the looming impact of adverse state budget trends,
we believe Congress should take a more expansive view to assure the stability
of the direct care work force and the quality of care for all nursing home
patients."

SOURCE Alliance for Quality Nursing Home Care

Debra DeShong Reed, +1-202-528-4214, or Amy Weiss, +1-202-203-0448, both for
Alliance for Quality Nursing Home Care