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SKILLED NURSING PROVIDERS CALL FOR
CHANGES TO CHAIRMAN'S MARK
'Bad Debt' Provision Coupled With Rollback of the '75% Rule'
Will Hurt Patients and Providers

WASHINGTON, DC - The Alliance for Quality Nursing Home Care today called on the United States Senate to reject a provision in the budget reconciliation package introduced by Chairman Charles Grassley (R-Iowa) that would slash Medicare funding used to reimburse skilled nursing facilities (SNFs) for 'bad debt.' The Alliance also criticized a provision in the bill that would reverse the '75 percent' rule that is used to classify inpatient rehabilitation facilities (IRFs).

"Beginning in January, skilled nursing facilities are facing $750 million in new federal cuts per year due to changes in Medicare's Resource Utilization Group (RUGs) payment mechanism. Now, on top of that, the Senate is considering new provisions that would result in even less funding for skilled nursing providers," said Stephen Guillard, Chairman of the Alliance for Quality Nursing Home Care. "At a time when the American population is aging and more Americans than ever are dependent on skilled nursing facilities, this is the last place the Senate should be looking to cut."

The Senate provision to cut funding for Medicare 'bad debt' reimbursements to SNFs by 30 percent is based on a similar guideline previously instituted for the hospital sector. However, such a provision would be much more harmful to SNFs because, unlike hospitals, the overwhelming majority of SNF bad debt is not collectible. Nearly 90 percent of SNF bad debt stems from state Medicaid programs' failure to pay Medicare co-payments for dually eligible individuals. Currently, 21 states pay only a portion of Medicare co-payments for dual eligibles, and four states pay nothing at all. This shortfall becomes uncollectible bad debt.

"If this debt is not repaid by Medicare or Medicaid, then it is not going to be repaid. This leaves skilled nursing facilities on the hook for treatment the government promised to provide, and means less resources will be available for patients," said Guillard.

The Alliance for Quality Nursing Home Care joined the American Health Care Association and the American Association of Homes and Services for the Aging yesterday in sending a letter to members of the Senate asking them to remove the 'bad debt' provision from the Chairman's budget reconciliation package.

In addition, the Alliance for Quality Nursing Home Care called on the Senate to remove another provision in the Chairman's reconciliation package that would temporarily rollback implementation of the so-called '75% rule.' Under the current rule, which is being phased in, a hospital or unit needs to have 60 percent of its patients meet certain criteria before it can qualify as an inpatient rehabilitation facility (IRF), and become eligible for higher Medicare payments. The Bush Administration is moving forward on the full implementation of the rule, which would eventually phase-in a rate of 75 percent. The Alliance supports this implementation. However, the Chairman's reconciliation package would rollback the rate to 50 percent for the next two years, costing the Medicare system an estimated $390 million.

"While the Senate is asking skilled nursing facilities to do more with less funding, they are allowing inpatient rehabilitation facilities to do less with more funding," said Guillard. "Currently, Medicare pays an average daily rate of $320 per day for services provided in SNFs, but those same services provided in an IRF cost Medicare an average of $850 per day. If the Senate reverses the '75 percent rule,' it will be to the detriment of patients and taxpayers."

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The Alliance for Quality Nursing Home Care is a coalition of 15 national skilled nursing providers who deliver care to hundreds of thousands of patients on a daily basis.