March 9, 2012

Nursing Home Changes – What’s on the Horizon for 2012 and Beyond

Nursing Home Changes – What’s on the Horizon for 2012 and Beyond

Information is slowly trickling in from the President State of the Union address and budget proposal. 2012 spells significant changes for the nursing home industry (Industry). These changes marked a continued concern to the stability of the Industry.

In speaking with our clients throughout the country the norms are:

  • Frozen Medicaid reimbursement (CT 3 years)
  • Frozen wages and wage cuts
  • Continued rate reduction to components of the system, or
  • Reductions to current reimbursement methodologies, or
  • Out-right stops in Medicaid payments (Illinois)

The above coupled with initiative by the Federal government’s on October 1, 2011 reduced Medicare reimbursement by an average of 11.1%. Where does it end?

Unfortunately, change has been proposed at the Federal level. The 2013 budget has found its way to congress for review and discussion. Within the confines of this budget and based upon continued efforts to control healthcare spending the following is intended to provide an overview of proposed changes. Unfortunately, these changes do not include rate increases and haven’t identified concerns for caring for the frail and elderly but instead, make mention only of continued reimbursement reduction to the Industry. The following are some of the proposed highlights:

  • Reduction to the market basket used to determine the wage index based upon each applicable core based statistical area (CBSA). MedPac recommends this for the periods of 2014 through 2021 for both the home health care and long term care industry. On a positive note, MedPac has recommended that the market basket update never go below 0.
  • Continued reduction for Medicare bad debt. The existing proposal would reduces reimbursement from 70% to 25% over the next three years
  • Equalization of Medicare claims payment to inpatient rehabilitation and skilled nursing facility for commonly treated position
  • Create a penalty structure by reduction Medicare payments to SNF’s that have a higher than average rate of re-hospitalization
  • Special focus on waste reduction, fraud and abuse
  • Blending of the Federal match applicable to Medicaid payments
  • A cap from the Federal government on the provider tax which is designed to reduce and phase down the tax from 6% to 4.4% by 2015, 4% in 2012 and then to 3.5% in 2017. Currently it is unclear how various State Medicaid programs will react to this funding reduction.

The above is intended to provide only an overview of what has been proposed by the Federal Government. Many factors including the November election, MedPac and Industry lobbying efforts will have a definite impact of in shaping the future of the industry.

We will continue to keep you informed as changes arise.

Related Industry