Senator calls for Medicare cuts to nursing homes

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Nursing homes have been arguing against Medicare reductions in House healthcare reform legislation. Now they are facing a similar fight in the Senate.

Sen. Max Baucus (D-MT), chairman of the Senate Finance Committee and a lead Senate negotiator, on Tuesday released a framework for healthcare reform. Baucus' plan would scale back Medicare spending. Lo and behold, nursing homes are a target.

A provision in the "Framework for Comprehensive Health Reform" would reduce annual market-basket updates for nursing homes, hospitals, home health providers, hospice providers, long-term care hospitals and inpatient rehabilitation facilities. It would include "adjustments to reflect expected gains in productivity."

Nursing homes have been working to make sure that a market-basket decrease would not end up in a Senate bill, as it did in House bills. (The House bills actually call for an elimination of the market-basket update as of Jan. 1, 2010, according to the American Health Care Association.)

If Baucus' plan gains a toehold, it would. (That is a strong possibility. Baucus said today that he will issue a chairman's mark of the Finance Committee's healthcare reform bill as early as next week. The mark will be similar to the proposal he issued, he said.)

The plan also would offer some other somewhat unsettling provisions for nursing homes. It would establish a Medicare Commission that would submit proposals to Congress about Medicare payments. Congress would have an opportunity to amend the proposal or pass an alternative proposal with an equivalent amount of budgetary savings. That might or might not work to nursing homes' favor. But because of nursing homes' reliance on Medicare to make up for Medicaid under-funding, the long-term care community believes that any kind of Medicare commission should take Medicaid spending into account.

Baucus' reform plan also would increase transparency of nursing home management information. Those participating in Medicare or Medicaid would be required to report certain information pertaining to operations and staffing. Facilities "would also be required to adhere to new reporting requirements." While the American Health Care Association has had reservations about transparency requirements, it said it is supporting such requirements in the House bills. The American Association of Homes and Services for the Aging generally has been in favor of them.

There are other provisions that could affect nursing homes. Beginning in fiscal year 2011, the FMAP (Federal Medical Assistance Percentage) rate would increase to 55% from 50%. Spending caps would be increased by 30%. And the plan would encourage pay-for-performance programs in the skilled nursing sector.

On a more positive note, Medicare would explore ways to incentivize beneficiaries to improve their health. And beginning in 2010, manufacturers that want their drugs covered under Medicare would have to provide a 50% discount off the negotiated price for brand-name drugs when beneficiaries reach the coverage gap, or "doughnut hole." That would be a good step for Medicare Part D.

While there are some good ideas in the plan, it also has more than enough to keep nursing home operators awake at night. It is clear more than ever that Congress is set on trimming the cost of Medicare. As of right now, lawmakers believe that cutting outlays to nursing homes is one way to do it.


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Daily Editors' Notes

McKnight's Daily Editors' Notes features commentary on the latest in long-term care news and issues. Entries are written by Editorial Director John O'Connor, Editor James M. Berklan, Senior Editor Elizabeth Newman and Staff Writer Marty Stempniak.