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N.H. nursing homes see Medicare cuts in federal budget plan



Monitor staff
Tuesday, February 13, 2018

It was hailed as the long-overdue compromise. With a six-week funding extension, $300 billion for the military, and a promise for $6 billion in opioid prevention funds, last week’s federal spending deal drew bipartisan praise.

But some New Hampshire nursing homes aren’t celebrating. Tucked into the 600-page bill is a series of cuts to long-term health services. According to an analysis by the Congressional Budget Office, the new legislation reduces direct Medicare funding for nursing homes by $1.9 billion over 10 years – or $140 million starting in October.

The law is not wholly detrimental to nursing home care; a provision to remove reimbursement caps on outpatient therapy services should free up $6.4 billion for nursing homes, according to the CBO.

But operators of New Hampshire facilities are warning the Medicare cuts will hit hard, and threaten an already-tenuous funding equilibrium.

“For there to be cuts in Medicare, which is sort of our one saving grace, it’s really untenable for us,” said Brendan Williams, president of the New Hampshire Health Care Association, which represents nursing homes.

“I see it as an immediate threat,” he added.

For the facilities, the issue is simple: Medicare provides the steadiest source of revenue, allowing them to make up for shortfalls from other funding sources. Cutting it, they say, takes away what has become a lifeline.

Facilities typically serve three types of patients: those with low incomes who use Medicaid to pay for long-term stays; those who use Medicare for shorter stays after hospital discharges; and those paying with private money. But between the three, reimbursement varies widely.

Medicaid – the federal program available to the elderly, low-income and those with disabilities – pays notably poorly. New Hampshire receives a 50 percent match from the federal government for its patients, the lowest rate allowed by law.

The Granite State has one of the highest gaps in the country between the cost of care and the amount paid back to nursing homes under the program – nursing homes lost on average $50 per Medicaid patient in 2016, according to a review by the American Health Care Association, Williams’s parent organization.

Medicare, in contrast, delivers higher payouts, covers a broader range of costs and comes with more certainty, Williams said. Even though Medicare patients have comparatively relatively short stays – they’re capped by law to 100 days – the overall revenue they bring in can stem the losses incurred by Medicaid patients.

Reducing available Medicare funds could affect nursing homes broadly, operators say.

For one, it could exacerbate persistent workforce issues, according to Tom Blonski, president of Catholic Charities of New Hampshire – which operates eight nursing homes across the state. The homes, which already struggle for money to keep wages attractive for workers, would face even trickier scenarios, he said.

An even tighter budget could put the facilities into “a Catch-22 situation,” Blonski said: admit defeat and lower bed counts, or cut services and see demand and user satisfaction drop anyway.

Making those decisions is never straightforward, he said.

“Sometimes, if you cut your nose off to spite your face, it comes back to bite you,” he said.

Dan Estee, administrator of Presidential Oaks in Concord, agreed that the state’s industry faces punishing conditions. Medicaid funding “wouldn’t even pay for a cheap hotel in New Hampshire,” he said.

“The situation we’re in – there’s no question it’s detrimental to all of us,” Estee said.

Still, the spending agreement carried a significant development, one pressed for by the nursing home industry for years: removal of the “therapy cap.” The law had put a lid on the amount of Medicare reimbursement nursing homes could receive for outpatient physical therapy services, a common feature of many homes.

Many facilities had claimed exemptions to the caps through the years, but those exemptions expired Jan. 1. The spending bill eliminated the cap for good.

Speaking on behalf of Sen. Maggie Hassan, who voted for the spending agreement, spokesman Aaron Jacobs pointed to that development as a net positive for nursing homes. And he argued that by successfully staving off proposed cuts to Medicaid, the agreement had averted a troubling alternative.

“It was a compromise, and the senator is grateful that negotiations led to a far better outcome than the harmful proposals Washington Republicans have put forward – including slashing Medicaid – that would have been devastating for seniors.”

And Ryan Nickel, a spokesman for Sen. Jeanne Shaheen, who also voted for the agreement, said it “includes some provisions Senator Shaheen doesn’t agree with.” But he added that Shaheen was “encouraged that several policies were included that will lead to healthier outcomes for patients and support nursing homes and home health services.”

Williams, for his part, said he was grateful that the therapy cap had finally been officially eliminated. But he argued that many facilities had been exempted from the cap through the years anyway, limiting the real-world financial effects of its repeal.

In the meantime, Williams continued, nursing homes will be feeling the sting from the other cuts.

“Facilities are already strained,” he said. “I talk to members who are already emotional. This adds to that hardship.”

(Ethan DeWitt can be reached at edewitt@cmonitor.com, or on Twitter at@edewittNH.)