South Florida Nursing Homes Squeezed by Medicare Cuts

The debt crisis our nation is currently facing is particularly worrisome for seniors who may have been anticipating certain monies and benefits should the need for care arise. Though Medicare does not pay for long-term nursing home care, it does offer reimbursements to nursing facilities for “post-acute care.” Post-acute care could involve, for example, a few weeks of rehabilitation needed after hip surgery before returning home. Medicare had recently shifted reimbursements to focus more on complex post-acute care (someone recovering from surgery who also has dementia) since this type of care is more involved and more expensive. This was a good shift of services. However, certain facilities took advantage of a loop-hole and received excess benefits totaling in the amount of 4 billion above projections. As a result, that much must now be cut from the Medicare budget from such services. The advantage taken by some will now be felt by all nursing facilities who are able to offer such care. Though such care is a smaller portion of overall nursing facility services, the cuts will affect them negatively. These cuts may require employee cuts, which will ultimately affect those they are caring for. With the financial aspect of elder care becoming more and more complicated, it is highly beneficial to hire a Geriatric Care Manager to facilitate care, as well as provide multiple resource options to you and your family. To learn more about Geriatric Care Management available in the South Florida areas of Palm Beach, Miami and Broward, visit us at

Nursing Homes Squeezed by Medicare Cuts

The nation’s nursing homes are facing a $4 billion drop in annual payments from Medicare. The cuts affect reimbursement fees for what’s known as “post-acute care” for seniors at skilled nursing facilities. Such services are needed by seniors who have been hospitalized and require rehabilitative services before returning to their own homes. Medicare does not cover long-term nursing home stays.

The extensive wrangling and possible impact of these relatively small cuts provides a preview of the brutal fights that would take place in any efforts to reduce the nation’s huge federal deficits. They are projected at more than $1.3 trillion this year and $1.1 trillion for the year beginning this October—several hundred times the size of the nursing home reimbursement cuts.

The Centers for Medicare & Medicaid Services (CMS) finalized the nursing home action in late July. They take effect October 1. The stock prices of several publicly traded nursing home chains plunged immediately and the industry reacted with strong protests. Some home operators said they would need to cut expenses because of the 11 percent payment reduction.

CMS estimates that nursing homes receive about 20 percent of their total revenues for such post-acute care, meaning their total revenues would drop by a bit more than 2 percent. While that may not seem to be a large cut, some homes say it will have far-reaching impacts on their business.

Ironically, the prospective cuts were caused by an improvement in payments for skilled nursing services that was introduced last October, explains Larry Minnix, CEO of LeadingAge, a major trade association in Washington representing senior care and housing providers.

In a simplified explanation of a very complex topic, Minnix said nursing homes are paid different reimbursement rates for different types of post-acute care. A simple case, for example, could involve a woman who broke her hip, had a pin placed in it at the hospital, and then spent a few weeks doing rehab in a nursing home before returning to her own residence. At the other end of the care continuum are much more complex cases. Such a case, he explained, might involve a senior with multiple chronic physical problems and dementia. When that person breaks her hip, post-acute care can be more complex and expensive.

Until last October, Minnix said, reimbursement rates for simple cases were attractive but less so for complex cases. A lot of those more expensive cases are handled by non-profit nursing homes (a big component of LeadingAge membership) as opposed to for-profit facilities that often focus on more profitable rehabilitation opportunities.

Medicare changed its reimbursement rules to more fairly balance payments for different types of care, Minnix said. “Medicare thought the post-acute care sector was properly compensated overall,” he said, “but they wanted to shift costs from less complex to more complex cases. This was a good thing.”

However, some providers of care services figured out how to game the new reimbursement system, Minnix said. They took advantage of loopholes that increased their payments for certain group and other therapy situations that did not require corresponding increases in their actual work loads. Reimbursements for these billings were more than $4 billion above CMS expectations, the agency said, and led to the comparable reduction in reimbursements for the coming year.

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