Pennsylvania nursing and long-term care homes stand to lose about $37 million this year if across-the-board federal budget cuts begin to go into effect as scheduled Friday, according to industry groups.
The nursing home reductions would originate from a proposed 2 percent cut in Medicare funding, amounting to $11 billion this year alone, according to the White House budget office.
That decrease in funding tied to the so-called sequestration would most directly affect hospitals, primary care clinics and other specialty providers, but nursing homes receive Medicare funding, as well. While most nursing home revenue comes from private funds -- or, once those funds are exhausted, state Medicaid coverage -- during the first 100 days of long-term care, patients over age 65 are eligible for Medicare coverage.
As long as the nursing home stay is precipitated by a recent hospitalization (a three-day hospital stay in the preceding 30 days), and as long as a physician determines the patient has a need for medical and continuous skilled nursing care, Medicare coverage kicks in for 100 days -- the first 20 days are covered fully, and a 20 percent co-pay is required on days 21 through 100.
After that, private funds and Medicaid take over.
A 2 percent reduction may not sound like much, but skilled nursing facilities -- like other health care organizations -- often live on a knife's edge, budgetwise.
The cuts, on top of others that have already been put in place, would "really strangle some long-term care providers," said John Dickson, CEO of Redstone Highlands, a Westmoreland County senior care facility with 77 nursing beds.
Redstone Highlands, with an annual budget of about $30 million, takes in about $2 million in Medicare payments each year. A 2 percent cut in that funding stream would nick Redstone for $40,000.
"It could equate to two part-time workers, or a full-time position," he said. "Where do we just pull $40,000 out of the budget?"
According to a 2012 analysis by Avalere Health and the Alliance for Quality Nursing Home Care, the sequestration-related Medicare cuts to skilled nursing facilities would total $782.5 million in year one, and $9 billion over 10 years, nationally.
Those estimates are based on the projected 2 percent figure, which is inexact. While the Medicare cut is indeed scheduled to be 2 percent, it would be up to the Centers for Medicare and Medicaid Services, or CMS, to carry out that cut.
If CMS enforces the reduction by cutting funding evenly across each of its line items, then everybody sees a 2 percent cut. On the other hand, there's no guarantee that each account takes the same cut, meaning some Medicare recipients could face cuts smaller than 2 percent -- while other sectors could see bigger ones.
In any event, nursing homes are bracing for a reduction in income, particularly nonprofit nursing homes in Pennsylvania.
"The unfortunate reality [is] that it's going to further strain our members," said Russ McDaid, senior vice president of public policy at LeadingAge PA, a statewide senior care trade group. For LeadingAge members, about 17 percent of "inpatient" days are paid for via Medicare. (Medicaid, the state-federal health care program, is the largest payer to nursing homes.)
Mr. McDaid, like Mr. Dickson, noted that the pending cuts come in addition to cuts already absorbed in recent budget years. In 2012, skilled nursing care facilities saw an 11.1 percent -- or $3.87 billion -- cut in Medicare funding. CMS said that was actually a "claw back," designed to combat unintended increases in therapy billing costs.
"Facilities are still recovering from those cuts," Mr. McDaid said.
On top of that, nursing homes could see other sequester-related reductions -- a possible 5.1 percent cut in housing funds for low-income seniors, and another 5.1 percent for Meals on Wheels funding. Both cuts originate from the estimated reduction in Older Americans Act funding, also contained in the sequestration package.
Because skilled nursing facilities often share space with senior housing and assisted-living facilities, they often take in Older Americans Act funding, too, Mr. McDaid said.
The White House, Senate Democrats and House Republicans have spent the last few weeks alternately blaming each other for, and trying to warn the public of, the possible damages to public services and the private sector that would stem from the $85 billion in budget cuts. Both President Barack Obama and many Republicans say they want to avoid sequestration, but that will require a compromise on budget items, entitlement changes and tax increases.businessnews
Bill Toland: email@example.com or 412-263-2625.