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Nursing Homes Struggle With Looming Medicare Cuts

Nursing Homes Struggle With Looming Medicare Cuts

Facilities Near ‘Medicare Cliff’ While Dealing With Increased Costs

BY MARION WEBB

Senior Staff Writer





A proposed 17 percent cut in Medicare payments to California nursing homes could result in a lowered quality of care at facilities already struggling to pay for everyday operations, according to local nursing home administrators.

A study compiled by the American Health Care Association, an industry group in Washington, D.C., found that Medicare payments to California nursing homes would be reduced by $70.77 to $347.99 per patient per day under the 2002-03 federal budget proposed by President George W. Bush.

Opponents labeled the cuts, which could take effect Oct. 1, as the “Medicare cliff.”

Making matters worse is that Medicaid money, upon which nursing homes heavily depend to pay wages, patient care and other items, is also in short supply, according to the AHCA. Medicaid is a joint federal and state-financed health insurance program for the poor.

In California, Medi-Cal pays for 65.2 percent of seniors in nursing homes compared to 6.1 percent of Medicare patients, according to statistics provided by the California Advocates for Nursing Home Reform.

“If this takes effect in October, it could very easily put us out of business,” said Mark Larson, administrator of the Country Hills Health Care Center, a 305-bed skilled nursing facility in El Cajon.

Larson said his clinic is barely operating in the black, and had to sell assets and even borrow on the owner’s life insurance policy to make ends meet.


– State And Federal Funding Shortfall

Larson expressed frustration with Medicare ,the federal health insurance program that covers short-term nursing-home stays for the elderly , and Medi-Cal, the state program that covers long nursing-home stays and medical care for low-income seniors in California.

“If you take a look historically on what Medi-Cal and Medicare have done in the last 10 years, the increases have not kept up with the cost of living indexes,” Larson said.

In the last five years, total Medicare spending rose 24 percent to $238 billion in 2001 and is expected to jump to $310 billion in 2006, according to published reports.

Under Bush’s proposal, Medicare payments would see a $3 billion cut, including $241 million to 1,160 California skilled-nursing facilities, the study found.

Larson said average Medi-Cal increases since 1992 were 2.9 percent per year and tied to mandatory items, such as nursing-staff wages.

Consequently, “We were not at liberty to apply that money where we felt it needed to be done , such as (to pay for) higher energy costs and liability insurance,” he said.

Pat McGinnis, executive director for the California Advocates for Nursing Home Reform, dismissed the AHCA report as being “biased” toward the industry.

CANHR is a nonprofit group based in San Francisco that provides legal and other services to nursing home residents and their families.


– Call For Reform

“The nursing home industry has been complaining for years,” McGinnis said. “It’s because their bias is , and has been , give us more money and we will provide better care and then you give them more money and they still don’t provide better care.”

McGinnis doesn’t support cuts in Medicare payments, but she finds more accountability of Medicare spending is needed to eliminate fraud by providers.

Because Medicaid pays for the bulk of nursing home patients compared to Medicare, which does not cover long nursing-home stays or prescription drugs, Medicare payment cutbacks wouldn’t hit providers as hard as trimming Medicaid money.

But Larson sees it this way.

“We get a high percentage of people that come in for short-term illnesses (such as a hip fracture) and we need to be reimbursed for the services we give them,” he said.

Many of the therapies are costly.

Although Medicare covers only up to 100 days of therapy , beyond that Medicaid and private insurers kick in , cutbacks would be disturbing, McGinnis agreed.

“The more therapy you get in the first 100 days under Medicare, the better chance you have of getting better and going home,” she said. Coverage includes things like speech therapy for stroke victims and hip replacement therapy for fall victims. Prescription drug coverage is being debated.

Larson said Medicare patients make up about 15 percent of his total patients, the same percentage of his privately insured patients. Medi-Cal pays for 70 percent of his patients.

The AHCA said a 17 percent cut in Medicare could result in nursing home bankruptcies as triggered by the 1997 Balanced Budget Act when Congress unintentionally cut $37 billion in Medicare funding.

Lawmakers restored some of that money, but the returns will expire this fall.

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