S&P Alarm About Nursing Home Sector Should Spur Administration, Congressional Concern for U.S. Seniors' Care, Deep Nationwide Job Losses

Nation's Second Largest Health Facilities Employer Warns of Negative Implications to Jobs, Quality

Washington, DC – The Alliance for Quality Nursing Home Care (Alliance) today said the new Standard & Poor warning issued in regard to the increased volatility in the nation’s nursing home sector is a direct result of the U.S. Health and Human Services’ (HHS) announcement that Medicare payment rates to skilled nursing facilities will be cut by 11.1 percent in the fiscal year starting October 1. Alan G. Rosenbloom, President of the Alliance, said, “The prospect of yet more Medicare cuts coming from a new congressional ‘super committee’ on top of the already devastating 11.1 percent funding reduction places seniors’ care, local jobs and sector stability in deep jeopardy.”

S&P, according to news reports, said the nearly $4 billion cut “was larger than expected” and “ignited worries that reimbursement reductions will impair cash flow prospects.”

Said Rosenbloom, “The S&P action will have a negative, immediate impact on small and large operators alike because banks who lend to regional and other local providers monitor actions by S&P, and this will increase their reluctance to lend to the sector, as well as increase costs for borrowers. As the lowest margin provider, nursing homes face rising costs and plummeting Medicaid payments. This confluence of events puts our patients, our workers and our entire sector in clear and present danger. This is a very serious action by S&P, and is a direct, unambiguous signal to the Administration and Congress that our sector can take no additional cuts.”

In attempting to correct an "inadvertent overpayment," Rosenbloom explained that the Centers for Medicare and Medicaid Services (CMS) has gone well beyond the cautious correction urged not only by the sector but also by a bipartisan group of House and Senate members. “By adding substantial changes in payment methodology for therapy services, CMS also has crossed the line from over-correction into real Medicare cuts,” he continued.

“Lawmakers will now be placed in the unfortunate position of having to deal with an increased threat to local seniors’ access to care as a result of this egregious regulatory action,” Rosenbloom continued. “Never in the history of the Medicare program has either CMS or Congress implemented such a large correction in one year – and the S&P warning helps confirm our concerns.”

Besides noting that the nation’s nursing home sector is America's second largest health facility employer -- accounting for 1.7 million jobs with a total impact of over $201 billion annually on U.S. economic activity (Source: Avalere Health) -- Rosenbloom underscored the immense value of nursing home care to growing numbers of Americans. "In addition to being a vital pillar of the U.S. economy and pivotal to badly-needed jobs growth in a dangerously weak economy, facilities have invested heavily to increase capabilities to admit, treat and return to home a rapidly increasing number of patients requiring intensive post-acute rehabilitation and care for multiple chronic illnesses," the Alliance leader concluded.