Providers have low hopes for better reimbursement

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Long-term care providers may find themselves in a situation this year where no news is good news regarding reimbursement. Then again, they probably aren't really going to have much of a choice: In a year where there presidential and other critical elections are making for a huge "no wake" zone, there simply may not be enough political will, yet alone legislative time, to get much done.

That so much heavy lifting was done last year in Washington on healthcare matters – namely the Medicare reform bill – probably doesn't help, either.
Nursing home providers also received direct boosts in 2003 via a healthy Medicare rate update and a one-time base-rate add-on.
Nonetheless, when the Medicare Payment Advisory Commission issued its first vote of the year in January and recommended no payment update for long-term care providers, there was reason for anxiety. True, Congress had not heeded its advisory commission's negative recommendations for the two cycles previous, but three times might be hoping for too much.
"We were really concerned about the MedPAC report," said Barbara Gay, director of information for the American Association of Homes and Services for the Aging, Washington. "It only looks at services covered by Medicare, but it doesn't look at the Medicaid under reimbursement that most facilities have. Cross-subsidize – nobody wants to say that in Washington, but that's what facilities have to do."


Hands off Medicare?


It appears the Republicans, who control and House and Senate, have no intention of working on Medicare reform or adjustment bills this year, Gay happily noted.
"The Senate said it doesn't want to re-open this thing (Medicare reform) until it's had a little time to ferment. So, I don't think there will be a technical corrections bill, but there probably will be one by next cycle. That's kind of good news for us. The Medicare bill that passed did provide for a marketbasket adjustment. We're cautiously optimistic."
Republican leadership in the House scheduled fewer than 100 days of sessions after returning from Christmas recess. That total is significantly less than the low number in 2000, the last presidential election year, experts noted.
"They want to be home to campaign and don't want to cast controversial votes in an election year so it doesn't look like there will be a lot of legislative activity," Gay acknowledged. "Apparently, they may not even try to get al the appropriations bills done until next year and just pass a continuing resolution early. It seems like the level of expectations is really low."


Not pulling the RUGs


One of the good "no news" signs for long-term care providers is that President Bush's budget proposal seems to allay long-term care providers' concerns about potential revisions to resource utilization groups (RUGs) classifications.
"My interpretation is they're not going to finish it in 2005, so look to 2006 for any change in the RUGs," Gay said.
The impact of RUGs changes has been estimated at $1 billion that would leave the funding stream annually when it happens so providers are understandably glad not to see it happen.
There does not appear to be a reprieve, however, from a $20 billion hit to the system that is scheduled to occur this June, when temporary Medicaid funding expires, observers say.
"I've been talking to people who have been making a case for the FMAP increase extension and they've told me it just doesn't get any traction," Gay said.
That will mean magnified stress on the states, which have seen their budgets under intense pressure for at least four years.
Few states will have the fiscal resources to fill gaps, claims the Kaiser Commission on Medicaid and the Uninsured. It recently released a survey that showed all but one state is considering or implementing Medicaid cost control strategies this fiscal year.
"We know that 2003 and 2004 were two of the worst years financially for state Medicaid programs since its inception nearly forty years ago, and 2005 could be just as bad from the states' perspective," said Vern Smith, co-author of the Kaiser study and principal of Health Management Associates.
That's why it is so critical that federal lawmakers start considering Medicaid reform, especially now that Medicare reform has been passed, said John Schaeffler, vice president of legislative affairs for the American Health Care Association, Washington.