$16 Billion in Medicare Cuts Over 10 Years in CMS Final Rule Will Hurt Jobs & Seniors’ Care 

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Washington, DC

– Reacting to the Centers for Medicare & Medicaid Services’ (CMS’) final rule cutting Medicare payments for skilled nursing care by as much as $16 billion over ten years, the American Health Care Association (AHCA) called the regulation “profoundly regrettable” and said cuts of this magnitude could cause significant harm to seniors and jeopardize long term care jobs. The long term care organization said that it especially alarming that CMS has ignored the concerns expressed by a significant bipartisan coalition of about a dozen U.S. Senators and 122 Members of the U.S. House of Representatives regarding the Medicare regulation, including members of key committees currently writing the nation’s health care reform legislation.

“Finalizing this regulation will undoubtedly weaken the long term care workforce and threaten care quality. CMS’ final rule, which will reduce Medicare funding for skilled nursing care by $1.05 billion in FY 2010 alone, seeks to correct for a so-called ‘projection error’ that the agency – not long term care providers – made in 2005 and is antithetical to the health system delivery reforms that America needs and seniors deserve,” stated Bruce Yarwood, President and CEO of AHCA. 

Since 70 percent of nursing home operating costs are labor-related, these cuts will affect the ability of nursing homes to care for America’s seniors, sidetrack our ongoing ability to create good-paying health jobs, and undermine Medicare policies already in place, which have made Medicare more efficient for patients, and more accountable to taxpayers.

“This regulation also casts a new light on how we are looking at the additional nursing home cuts that Congress is proposing to help pay for health care reform,” Yarwood continued. “We are alarmed by the magnitude of these cumulative cuts, which will be especially damaging to the care of America’s seniors as these reductions in Medicare funding must viewed in the context of the growing number of states that are either freezing or reducing Medicaid funding for nursing facility care. In a bad economy, this is a poor decision at best. Congress passed a stimulus bill a few months ago to encourage job growth and in one fell swoop, a federal agency with a stroke of the pen cuts jobs. It doesn’t make any sense.”

The long term care leader noted that Medicare and Medicaid funding are inextricably linked, and the combination of cuts to both programs squeezes local facilities in a way that could harm elderly beneficiaries’ care, negatively impact caregiver jobs and be detrimental to local economies.

“The failure to consider these reimbursement policy changes in combination,” said Yarwood, “has ultimately made passing a fair, equitable and effective health reform bill into law even more difficult. These are serious decisions which should be made by Congress. A federal agency like CMS should not be permitted to cut care for seniors.”

“Achieving a sweeping health care reform bill we can all be proud of, and which will improve the health of every American is a necessity, not an option. Yet, protecting vulnerable seniors in the process must always remain an undeniable priority from which we must not deviate. Roadblocks – such as this regulation – should not be put up to our efforts to work collaboratively and constructively to achieve ultimate health care reform,” Yarwood continued.

During the upcoming August recess, AHCA will ask lawmakers to remain cognizant of the far reaching implications that health care reform will have for seniors, local communities, and workers in every corner of America. The long term care community fully intends to explain in a tangible, informative manner why it is essential for Congress, upon its return in September, to recalculate its budgetary assumptions and options commensurate with the steep Medicare funding cut that has now just gone into effect.   

“When these regulatory cuts are considered in addition to possible Congressional Medicare cuts, nursing homes will have to face very difficult decisions, including the possibility of staff reductions,” Yarwood concluded. “Given the current state of the economy, cutting Medicare by administrative action is especially troubling.”

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The American Health Care Association represents nearly 11,000 non-profit and proprietary facilities dedicated to continuous improvement in the delivery of professional and compassionate care provided daily by millions of caring employees to 1.5 million of our nation's frail, elderly and disabled citizens who live in nursing facilities, assisted living residences, subacute centers and homes for persons with mental retardation and developmental disabilities.  For more information, please visitwww.ahca.org

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