Study: Nursing homes to lose $79 billion in funding

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Dan Mendelson, CEO of Avalere Health
Dan Mendelson, CEO of Avalere Health

The Centers for Medicare & Medicaid Service's 11.1% reimbursement rate cut to skilled-nursing facilities will reduce Medicare payments to the entire sector by $79 billion over 10 years, according to a new report. The regulation, which is scheduled to go into effect Oct. 1, also will reduce national economic activity by $6.75 billion in FY 2012, according to a report released Monday by research firm Avalere Health.

Avalere CEO Dan Mendelson said that this recent regulation — in addition to $29.4 billion in payment cuts enacted to fund healthcare reform and a $16.8 billion Medicare payment reduction in 2010 — will put incredible pressure strain on the sector. In addition, Medicaid cuts, such as those being enacted in Ohio and Florida, will further squeeze nursing homes, Mendelson added.

“In the long term, there is concurrence among policymakers that SNFs hold the key to better patient management and cost reduction, but in the short term, these pressures on Medicare and Medicaid rates will be exceedingly difficult to manage,” said Mendelson, in a joint conference call with Alan G. Rosenbloom, the president of the Alliance for Quality Nursing Home Care, which funded the study.

Rosenbloom contends that CMS changes to therapy payment methodology crossed the line from over-correction into real Medicare cuts.

“These new Medicare cuts — above and beyond a payment correction we ourselves concurred was necessary — will contribute to destabilizing America's second largest health facility employer and the substantial economic activity facilities generate nationally and at the state level,” Rosenbloom said.

The full text of the report was not made readily available for the press following the conference call.
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