Ten states to absorb majority of Medicare bad debt funding cuts, report finds

Bad debt provisions of recent legislation will cut skilled nursing facility payments by nearly $3 billion between 2012 and 2021, with a handful of states bearing the brunt of it, a report finds.

The recently passed Middle Class Tax Relief and Job Creation Act of 2012 will mean that skilled nursing facilities in 10 states will absorb the largest Medicare funding cuts, according to an analysis conducted by Avalere Health.

The report, released by the Alliance for Quality Nursing Home Care, found the following states will be most affected: Florida, Ohio, Illinois, Pennsylvania, North Carolina, Louisiana, Indiana, Tennessee, Georgia and New Jersey.

The federal government restrains states from collecting up to 90% of SNF bad debt, said Alliance president Alan G. Rosenbloom.

The American Health Care Association also has stated its opposition to bad debt provisions. Greg Crist, vice president of public affairs for AHCA, told McKnight's the report falls in line with his group's assertion that bad debt provisions disproportionately impact some states more than others. 

"We feel like we have a better alternative and we'll continue to push that," Crist said.

AHCA's alternative involved penalties for nursing homes that failed to meet hospital readmission goals, among other measures.

“SNFs have no legal recourse to collect ‘bad debt' from state Medicaid agencies -- and is more accurately described as ‘uncollectible debt' as mandated by federal law,” Rosenbloom said.

Click here to see the bad debt breakdowns by state.