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

MedPAC's Vote Against Normal Inflation Adjustment for Skilled Nursing Harmful to Stability and Quality, Provider Groups Say

January 10, 2006 (WASHINGTON, DC) - The American Health Care Association (AHCA) and the Alliance for Quality Nursing Home Care (the Alliance) expressed grave disappointment today over the Medicare Payment Advisory Commission's (MedPAC) recommendation against providing an inflation adjustment in Medicare funding for skilled nursing facility (SNF) care in 2007. Both groups maintain that an update is critical for ensuring Medicare funding reflects increasing costs of providing quality care to the two million patients receiving care annually in SNFs.

The Commission's recommendation for a zero update is particularly harmful, AHCA and the Alliance said, because skilled nursing providers are faced with escalating costs in addition to gross underfunding of state 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 funding helps assure the availability of appropriate resources for Medicaid patients.

Bruce Yarwood, president and CEO of AHCA, called the recommendation "ill-advised," adding that the skilled nursing segment has the lowest margins in all of health care. "Funding stability is the key to sustained improvements in care quality for nursing home residents," Yarwood said. "The need for annual updates is clear, and MedPAC's failure to recognize this is both confounding and disconcerting."

Skilled nursing providers are absorbing $750 million of new federal cuts this year resulting from changes made to Medicare's Resource Utilization Group (RUGs) payment mechanism. Medicaid underfunding across the board put an additional strain on providers who have made significant strides in improving quality care.

"MedPAC's recommendation today is not in the best interest of our nation's most vulnerable citizens who rely on adequately-funded nursing homes for their care," said M. 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. Failing to account for these cost increases is both inadvisable and ill-timed."

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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.