Health Reform Action Shifts to the Senate

VHCA (11/13/2009)

On Saturday, November 7, 2009, the U.S. House of Representatives narrowly passed the Affordable Health Care for America Act (HR 3962).  The vote was strongly along party lines with one Republican voting for the bill and 39 Democrats voting against. 

HR 3962 mandates Medicare payments cuts to SNFs of $23.9 billion over 10 years, but contains additional Medicaid payments of $6 billion for a four year period.  The bill also contains extensive nursing home transparency provisions.  The attention now turns to the Senate where democratic leadership is in the process of merging the two bills that were reported by the two committees that have jurisdiction over health care reform. Intensive negotiations are underway to try to garner a sufficient number of votes to pass the legislation in the Senate. 

The provisions of the Senate bill appear to be more favorable to nursing homes. The Medicare SNF cut is $14.6 billion—which, while still high, is much better than the House number. In addition, the nursing home transparency provisions are not as burdensome in the Senate bill as they are in the House bill.

What Implications Does H.R. 3962 Have on Post-Acute & Long Term Care?

• Cuts Medicare funding for skilled nursing facilities (SNFs) by $23.9 billion over ten years through two provisions that would eliminate the FY 2010 SNF market basket update effective January 1 – September 30, 2010, and would initiate a Medicare productivity adjustment beginning in 2012.
• Codifies the RUGs IV overhaul detailed in the FY 2010 SNF PPS Update issued by CMS that goes into effect on October 1, 2010.  Additionally, it would recalibrate rehab and non-therapy ancillary (NTA) Medicare payments to SNFs beginning April 1, 2010. This would result in a decrease of Medicare payments for patients requiring the most intense rehabilitation services by 5.5 percent.
• Implements significant new nursing home oversight measures through “transparency” provisions.  These provisions include significant increases in civil monetary penalties as well as enhanced reporting and disclosure requirements.
• Provides $6 billion over four years in dedicated Medicaid funding for nursing homes that meet specific criterion.
• Extends the current exceptions process for Medicare Part B therapy caps through December 31, 2011.
• Includes a pilot project for implementing a Medicare bundled payment system for post-acute care providers. 
• Employer insurance mandates – we are also mindful that the employer mandates will also impose additional financial obligations on some employers who may not be offering coverage, or offer coverage not in compliance with the House bill requirements.

H.R. 3962: AHCA Observations and Perspectives

• AHCA/NCAL and its affiliated membership supports the goals of national healthcare reform that would expand coverage, improve quality and improve access.  
• The $23.9 billion, ten-year cuts contained in the Affordable Health Care for America Act – coming on top of cuts of $12-16 billion to Medicare-funded nursing home care just put into effect by CMS on October 1, 2009 – will further destabilize our sector.
• The level of funding cuts of $14.6 billion over ten years contained within the Senate version – while still steep – represents an improvement over the much larger cuts in the House. 
• We encourage the Senate to hold strong and not increase the level of the Medicare cuts above $14.6 billion during conference negotiations, as anything larger would be untenable for our profession. 
• With facilities devoting a full 70% of operating expenses to wages, benefits and other labor costs, these drastic Medicare cuts of nearly $24 billion, coupled with the CMS cuts that went into effect on October 1, 2009, will result in a job loss of nearly 50,000 employees in FY 2010 alone. 
• Workforce stability plays a vital role in the delivery of high quality long term and post-acute care. 
• When our nation is facing unemployment levels more than 10%, provisions that will contribute to greater unemployment are misguided and not in the best interest of our nation’s economy – or healthcare system. 
• The bottom line is that the steep Medicare cuts approved in the House bill will mean lost jobs in addition to compromised eldercare.
• The Nursing Facility Supplemental Payment Program represents a first step in acknowledging the nation’s chronic Medicaid underfunding crisis – which shortchanges seniors’ nursing home care more than $4 billion annually.  
• We are pleased that Congressional leaders have recognized the critical role Medicaid plays in the provision of long term care and included this provision that begins to address the program’s underfunding of care provided.  
• Stability must be brought to the Medicare and Medicaid programs in order to protect the care of nursing home patients, and the jobs of frontline caregivers vital to the provision of quality care.
• We are concerned with measures included in H.R. 3962 that would implement an overhaul to the payment and patient classification systems before the impact of those changes can be understood.  
• We urge a one-year delay in implementation of the Resource Utilization Group IV (RUGs IV) until the building blocks are in place and crucial information is available – including the new MDS 3.0 patient assessment instrument – so that the Administration and providers alike can assure that the new system is budget neutral and preserves patient quality care. 
• We also support the provision in the Senate bill which requires that MedPAC consider Medicaid margins when making their recommendations to Congress on Medicare payments.