Proposed state Medicaid cuts cause backlash from nursing home operators, wouldn't close budget gap anyway, top official says

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Medicaid cost-cutting strategies the Department of Health and Human Services has suggested to states will not be enough to close $175 billion in cumulative budget gaps—and that's the way it should be. And that's according to HHS Secretary Kathleen Sebelius, based on remarks she made Friday.

Sebelius has been reluctant to lift maintenance-of-effort requirements that ensure states maintain Medicaid eligibility at levels equal to what they were when the healthcare reform law was passed. Instead, she suggests that changes to states' optional Medicaid benefits programs can be made without a penalty from the federal government. But these programs totaled only $100 billion in 2008—not enough to eliminate the states' collective debts. Sebelius said that the strategies she's suggesting would help with cost reductions without just slashing benefits, according to a Modern Healthcare report.

Meanwhile, states planning to slash benefits are running into stiff opposition from the nursing home industry. In Rhode Island, for example, Gov. Lincoln D. Chafee (R) has proposed reimbursing nursing homes based on services rendered, the Providence Journal reports. That would save roughly $12.8 million—and have a devastating impact on nursing home staffing, according to James P. Nyberg, director of LeadingAge RI.

In Nevada, nursing home groups have struck back against Gov. Brian Sandoval's (R) proposal to cut nursing home reimbursements by $10.1 million. Based on previous rulings from the 9th U.S. Circuit Court of Appeals, the governor's plan could be illegal, according to an analysis commissioned by the Nevada Health Care Association and presented to the state's Legislature.

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