November 6, 2012
Medicare Rate Cuts Affect Nursing Homes
In July 2011, the Centers for Medicare and Medicaid Services announced that, as of October 1st, it would begin cutting reimbursement rates for post-acute care to nursing homes by 11.1% in order to cover a $4 billion budget shortfall from 2010. Then, as part of the “Middle Class Tax Relief and Job Creation Act of 2012,” Congress cut Medicare payments to nursing facilities by reducing reimbursements for Medicare co-payments that beneficiaries or state Medicaid programs did not make. Unfortunately, these cuts are also coming at the same time that many states are cutting Medicare payments to nursing homes as well. Nursing homes are losing money on several fronts, which is causing significant difficulties.
Post-acute care can range from rehabilitation after surgery or an injury to care for patients that need to recover from a serious illness before returning home. Nursing homes are paid a different reimbursement rate for each type of post-acute care offered. The more complex the patient’s issue, the higher the rate of reimbursement paid from Medicare. It is estimated that nursing homes receive approximately 20% of their total revenues from post-acute care.
Post-acute care is a very important part of the healing process for many elderly patients. Hospitals generally try to discharge patients to nursing home facilities as soon as possible, so they can reduce their costs. The nursing home facilities provide care for patients that no longer need hospital care, but are unable to take care of themselves at home.
On average, a nursing home may charge $500 per day for short-term care, with the cost dropping as low as $120 per day for long-term care. In 2010, patients paid an average of $219 per day for a private room. The rate cuts will not directly cause the cost of nursing home care to rise. Unfortunately, the rate cuts may force many nursing home facilities to charge patients more to make up for the shortfall. Just as importantly, it could become very difficult for patients with more expensive conditions to find a nursing home that will accept them, because the nursing home will not want to risk losing money.
In addition these government cuts may lead many nursing homes to make staff cuts and lay-offs. In addition, many facilities will be forced to cancel construction and other projects. Unfortunately, cuts in staffing mean that fewer personnel are available to care for patients in need. Without the support that skilled staffers provide, readmissions increase, which further drives up the costs to Medicare.