Study: Nursing homes' Medicare cut would lead to $4.5 billion hit to U.S. economy

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Bruce Yarwood, AHCA CEO
Bruce Yarwood, AHCA CEO
The 3.3% Medicare cut proposed by the Center for Medicare & Medicaid Services would result in a negative U.S. economic impact of approximately $4.5 billion in fiscal year 2009, a study released by The Lewin Group finds.

The Medicare regulation, which was released on May 1, also would result in the loss of approximately $1.8 billion in wages, 43,530 jobs and approximately $661 million in tax revenue next year, study authors claim. The regulation calls for reducing Medicare payments by $770 million to skilled nursing facilities in the next fiscal year.

“The administration has put us in a lose-lose situation,” said Bruce Yarwood, CEO of the American Health Care Association, who commented on the new study during a conference call with the media on Tuesday.

Joining him on the call were Alan Rosenbloom, president of the Alliance for Quality Nursing Home Care; Al Dobson, a consultant with The Lewin Group; and Tony Marshall, reimbursement director for the Florida Health Care Association.

CMS said it issued the regulation to recalibrate rates after making a forecasting error. It also proposed a 3.1% increase in the marketbasket (inflationary update) for nursing facilities for next year. Both actions combined would result in a net loss of $60 million, the agency said.

Yarwood, who said that the rural marketplace would be hit particularly hard by the $770 million cut, said CMS' logic regarding the reduction is flawed: “We (CMS) made a mistake and therefore we want the money back. That's irresponsible to us.”