Contact:
Susan Feeney, AHCA - (202) 898-9354
Jim Morrell, the Alliance - (202) 457-1110

Long Term Care Providers Oppose MedPAC's Recommendations Against Normal Inflation Adjustment to Medicare Skilled Nursing Rate

December 8, 2005 (WASHINGTON, DC) -   The American Health Care Association (AHCA) and the Alliance for Quality Nursing Home Care (the Alliance) today both criticized the Medicare Payment Advisory Commission (MedPAC) staff recommendations for no inflation adjustment in Medicare funding for SNF care in 2007. Annual inflation adjustments are designed to ensure that Medicare funding reflects increasing costs of providing quality care to beneficiaries..

"As many public policymakers recognize, the most prudent way to maintain sustained improvements in nursing home care quality is to ensure long term care funding stability," said Bruce Yarwood, President and CEO of AHCA, the nation's largest long term care association representing non-profit and proprietary facilities. "It is simply incomprehensible that MedPAC does not recognize the need for a normal inflationary adjustment to an industry with the lowest margins in all of health care."

"This recommendation would lead to devastating cuts in funding for Medicare patients at skilled nursing facilities," said Keith Weikel, Chairman of the Alliance.  "Increasing labor costs, out of control litigation-related costs, and escalating drug prices are all driving up the cost of delivering quality care.  To not update Medicare's funding mechanisms to reflect these basic facts would be careless and harmful."    

AHCA and the Alliance contend that not including a market basket update is especially harmful because in addition to coping with escalating costs, skilled nursing providers must also grapple with shortfalls in Medicaid payments.  Two out of three patients in nursing homes rely on Medicaid to pay for their care, yet on average, Medicaid underpays for these patients by nearly $13 per patient per day. As a result, Medicare payments must help subsidize inadequate Medicaid payments.

"Nursing homes already are bracing for $750 million in new federal cuts next year because of changes made to Medicare's Resource Utilization Group (RUGs) payment mechanism, not to mention proposed Medicaid cuts across the board," Weikel added. "While skilled nursing providers have made extraordinary improvements in the quality of care they provide, MedPAC's staff recommendations would cut funds for patient care and could put these improvements at risk."

"It is evident that the profession's commitment to quality is creating results, but a stable funding environment is needed in order to ensure that the progress continues," concluded Yarwood. "It is clear from MedPAC's staff recommendation, that they are not recognizing - nor are they addressing - the basic fact that increases in the costs of providing long term care outpace inflation."

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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.