Last month, CMS issued a final rule announcing the reduction of Medicare skill nursing facility Prospective Payment System rates for FY12 by $3.87 billion. (Source) According to Avalere Health, which represents long term care providers, the cuts not only would affect long term care facilities, but would reduce economic activity in the most populous states, which includes Texas ( economic activity loss: $497 million; Medicare revenue loss: $349 million).
An excerpt of the press release:
Overview of Recent SNF Payment Cuts and Ongoing Threats
FY 2010 Rule. Estimated decrease of $16.8 billion over ten years (FY 2012-2021) from the 3. 3 percent forecast error (i.e., case mix) adjustment in FY 2010.
Health Reform. Estimated decrease of $29.4 billion over 10 years from productivity adjustments/reductions in the market basket (inflation) update starting in FY 2012. The productivity adjustment is assumed to be one percent each year.
2010 Regulation. Estimated decrease of $2.6 billion over 10 years from the 0.6 percent forecast error cut in the market basket update for 2011.
FY 2012 Rule. Estimated decrease of approximately $60 billion over 10 years from the 12.6 percent RUG recalibration/parity adjustment and an estimated decrease of $19 billion over 10 years from the group therapy and reporting changes in the rule.
Medicaid Cuts. Florida and Ohio have cut Medicaid payments to nursing facilities by six to seven percent already this year. In addition, the Joint Select Committee on Deficit Reduction may recommend additional cuts in Medicare or Medicaid payments to nursing facilities. Medicaid is the biggest payer for nursing facility care, so any broad-based Medicaid reductions recommended by the Joint Committee would have a disproportionate impact on nursing facilities.
Potential Sequestration. SNF Medicare payments could be cut by two percent, or approximately $10 billion over 10 years, if the automatic sequestration in the Budget Control Act takes effect.
