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Nursing Home Industry Leader Worries About Cuts To Medicare, Medicaid

Apr 19, 2011

Mark Parkinson, who heads the nation’s largest nursing home lobby, finds it hard to celebrate government estimates predicting an explosion in the number of Americans aged 85 and older during the next few decades.

“This would be terrific news, but the challenge is that at a time when we have this enormous demand on resources to take care of older people, this country has never been in a worse position to do it,” Parkinson, president and CEO of the American Health Care Association, said Tuesday at a briefing with reporters. The association represents about 11,000 nursing homes and assisted living facilities.

Parkinson, a former governor of Kansas who came to the organization in January, said his group realizes the pressure on Congress and the states to find ways to slow the growth of Medicare and Medicaid, which together pay for most nursing home care. “We understand the budget situation is so dramatic that the status quo can’t continue,” he said. “We want to be part of the solutions to the long-term deficit.”

But Parkinson is critical of a key feature of the new health law that aims to slow growth of Medicare — the creation of an independent panel that will have broad authority to recommend ways to curb Medicare spending. Starting in 2015, the Independent Payment Advisory Board -- a 15 member independent panel, to be appointed by the president and confirmed by the Senate—would make its recommendations if spending passed certain benchmarks. Congress would be required to accept those or offer others that would achieve the same effect.

Like a number of other provider groups that oppose the new board, Parkinson said Congress should not give up its authority to a panel that is not directly accountable to the public. “IPAB further erodes our ability to advocate on behalf of older people,” he said.

Parkinson also opposes efforts by Republicans to turn Medicaid, the federal-state health program for low-income people, into a block grant program that would give states more flexibility. "It potentially could be very bad for nursing homes,” he said, citing the likelihood that providers would see additional cuts in reimbursements. 

The typical nursing home counts on Medicaid to cover about seven out of 10 residents. Many states are already curbing reimbursements.

In addition, nursing homes receive money from Medicare. Those payments will be cut by $14.6 billion over the next decade under the health law to help finance the coverage for 32 million Americans who currently are uninsured. The first of those cuts begin in October. Parkinson said the industry agreed to the cuts partly because it feared an even bigger one. But reducing the number of uninsured Americans by 32 million under the law by 2018 will do little for nursing homes because nearly all of their residents already have coverage.

The association wants Congress to consider paying nursing homes and other providers a single fee for a patient’s illness episode rather than a per day fee. That way if a patient needs a hip replacement, providers would determine how to split up the money and would be rewarded only if the patients did well.

Another priority of the association is making sure nursing homes can be included in the new accountable care organizations that will start next year in the Medicare program and are expected to also be offered in the private sector.

ACOs, which would be formed most likely by hospitals and doctors, would get paid by Medicare and other insurers a lump sum each year to care for a population and would share in any savings if they can hold down cost while meeting quality targets. “We don’t want nursing home to get left behind,” Parkinson said.

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