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Health & Hospitals

Area Nursing Homes Brace for Budget Cuts

By Clark Byron, SBJ Staff

April 18, 2011 – Nursing homes and their representative groups throughout the nation are making grave predictions of what may happen if entitlements such as Medicare and Medicaid are cut too deeply, including the possible closing of many long-term care facilities.

As lawmakers in Washington clash over how to reduce federal spending, it seems clear that the budgetary axe will fall hard on entitlement programs that serve the elderly, disabled and chronically ill, and the facilities that provide their care when their savings or ability of their families is depleted.

Nursing homes depend heavily on reimbursement from Medicare and Medicaid. “It’s going to have an impact on the health care industry,” said Deborah Clark, Administrator of Heritage Health Care Center in Savannah. Heritage is a 120-bed facility that provides rehabilitation and long-term care services.  About half of the beds in Heritage are Medicaid beds, according to Clark. “But it’s going to be the actual resident that’s going to be affected by the cuts,” she said. That’s because what Medicare and Medicaid won’t reimburse will have to come from patients.

Under certain conditions, Medicare will still pay some nursing home costs for beneficiaries who require skilled nursing or rehabilitation services. It will pay up to 100 days in a calendar year for long-term care. According to the Web site,, Medicare will cover care in nursing homes under limited circumstances. The care must be considered medically necessary, for a limited period of time, provided by a certified facility, and must immediately follow a qualifying inpatient hospital stay of at least three days.

Medicaid provides for long-term care for low-income patients on an ongoing basis by negotiating reduced rates and paying the facilities directly. Approximately 73 percent of long-term care patients in Georgia are on Medicaid, 12 percent on Medicare and the balance funding their own stay.

Funds for Medicaid come from both the feds and the state. The federal portion comes from a fund called the Federal Medical Assistance Percentage or F-MAP. In Georgia, the F-MAP portion is about 65 percent and the State of Georgia’s share is 35 percent. The actual ratio can fluctuate quarterly depending upon a state’s economy, but states’ shares nationwide usually hover around the 35 to 40 percent mark.

States must commit ahead of time their portions of the Medicaid split and can draw down federal funds only as state funds are also expended. The less the state spends on Medicaid, the fewer federal dollars it can draw down.

The federal stimulus program known as the American Recovery and Reinvestment Act of 2009 (ARRA) bolstered Medicaid with an enhanced F-MAP. In August of last year, Congress voted to extend the enhanced F-MAP into calendar year 2011. The legislation provided states $16.1 billion through a phased-down enhanced match of 3.2 percent during the first calendar quarter of 2011, and then dropping to 1.2 percent in the second calendar quarter until it is phased out at the end of the third.

Reimbursement rates to nursing homes can be up to $100 or more below the rates paid by conventional health or long-term care insurance, however. “The Medicaid reimbursement rates in Georgia are among the lowest in the country,” said Jon S. Howell, President of the Georgia Health Care Association. Howell told the Savannah Business Journal that, “With consumer expectations continuing to rise and the desire of the provider community to really raise the bar, it becomes increasingly difficult to do it on a shoestring budget.”

Last week, the Georgia legislature voted to borrow millions from its state Medicaid funds to help cover a possible $300 million shortfall in the state health care plan for teachers, state employees and retirees.

Public Opinion
Nationally, Medicaid provides health care for some 70 million low-income Americans of all ages. In Georgia, the number is about 1.5 million. “Contrary to the claims that Medicaid is a bloated budget buster, the reality is that Medicaid costs much less than private insurance on a per capita basis and its per capita costs have grown more slowly than private insurance premiums,” said Leighton Ku, Professor of Health Policy and Director of the Center for Health Policy Research at The George Washington University. According to Ku, if passed, the proposed budget presented by House Budget Committee Chairman Paul Ryan, R-Wisconsin, would, “… both cancel the expansion of Medicaid for low-income adults enacted under the Affordable Care Act, as well as slice $771 billion out of the remaining Medicaid program.” Ku’s comments came in a blog on the Web site

Contrary to popular belief, it appears most Americans don’t want to see major funding cuts to Medicaid. In a recent report issued by the Kaiser Family Foundation, 39 percent of Americans supported the idea of only minor reductions to Medicaid while another 47 percent opposed Medicaid cuts altogether. Only 13 percent of those surveyed said they were in favor of deep cuts to Medicaid.

The same report showed that 39 percent said that Medicaid was ‘very important’ to them while another 20 percent described the entitlement as ‘somewhat important.’

Who are the people who favor deep cuts to Medicaid? According to an editorial in the latest issue of The Nation, the answer may be surprising. “One of the most fundamental tensions in our politics is that senior citizens are, simultaneously, the demographic group that most benefits from the welfare state and the one most sympathetic to the. . .push to abolish it.” The editorial went on to say that, “Senior citizens were also the group most opposed to Obama’s Affordable Healthcare Act, with 58 percent now in favor of repeal.”

What will actually happen in Congress’s battle over the budget remains to be seen. But with such deep cuts in public health programs looming,  long-term care providers and consumers are both holding their breath.
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