The American Health Care Association (AHCA) is very concerned about the Medicare skilled nursing facility (SNF) final rule (see next story) issued by the Centers for Medicare & Medicaid Services (CMS), and is working on a multi-faceted response. They are concerned that the CMS rule will over-correct for a flawed payment system and result in the government actually spending less than $31 billion in the sector next year. Certainly this proposed Medicare rule doesn’t account for the challenges we face with increased costs, drastic Medicaid cuts and the looming threats of additional cuts.

AHCA staff is currently working to take all possible steps to minimize the impact of the rule. Further, they are working to make certain that this is the last hit that we take this year. Unfortunately, there are still three serious risks that we face. They are:

1. Attempts on Capitol Hill to claw back any unintended payments we received this year.
2. Specific attempts to cut skilled Medicare rates because of persistent arguments that our margins are too high.
3. General cuts to both Medicaid and Medicare that would impact the sector, like cuts in provider taxes and the blended Medicaid rate proposal.

AHCA has developed estimates of the impact of the reduction for each state to use in their own advocacy efforts. (View the complete list of all states here under the Medicare A & B heading.) For Minnesota, it is estimated that the reductions in Medicare reimbursement effective October 1, 2011 will be $55.6 million, with average rate reductions of 11.4% or $56.64. These amounts do not include reductions which may occur from the changes in the recognition of group therapy minutes for reimbursement purposes and the Change of Therapy Assessment requirement.

The reduction estimates are based on Medicare patient days by resource utilization group (RUG) category that were provided on the CMS website for the periods of July 1, 2010 through September 30, 2010 (the last three months of RUG‐III) and October 1, 2010 through April 30, 2011 (the first seven months of RUG‐IV).

AHCA also analyzed the average rate, average rate change, and percentage rate change for each state and the nation. This information is provided for October 1, 2009, October 1, 2010, and October 1, 2011, to illustrate the rate changes that occurred upon the implementation of RUG‐IV on October 1, 2010 and the rate reductions effective October 1, 2011. For Minnesota, the numbers look like this:

At this time, there are at least two ways that you can help AHCA accomplish their goals. First, please continue your political support and activity. The need to exert our political pressure has not diminished just because the final rule has been announced. We need political pressure now, more than ever.

Second, we need examples from members of the economic impact of this rule. CMS states in its rule that it does not believe we will lay people off, freeze wages, stop construction of new buildings or renovations of older ones. We need “real world” examples of what you have to do to absorb these drastic cuts. Please send those examples to Patti Cullen at the Association office and we will forward them on to AHCA.

A copy of the final rule is available here on the Federal Register website.

AHCA has made available on their website here the Medicare rate calculator for member use. The rate calculator has been updated to reflect Medicare payment policy changes found in the SNF PPS final rule for fiscal year 2012 that was issued on July 29, 2011. The final rule and the rate calculator illustrate the net impact of a 2.7% increase in rates for the market basket update, a 1.0% reduction in rates due to the Accountable Care Act (ACA) mandated productivity adjustment, and a 12.6% reduction in rates due to the recalibration of the parity adjustment, for a net 11.1% reduction in SNF PPS rates for FY 2012. (Please note that the individual adjustments may not add to the total adjustment due to rounding.)

Patti Cullen, CAE
952.851.2487
pcullen@careproviders.org

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