Skilled Nursing Facilities to Lose $600,000 Annually Under Senate Bill

Under the Senate’s plan to repeal and replace Obamacare, most skilled nursing facilities will lose far more in Medicaid dollars than they make each year — and states could start the belt-tightening as soon as next year if the legislation passes in its current form.

Pointing to two key changes in the way Medicaid funding will filter down from the federal government to the states, American Health Care Association (AHCA) President and CEO Mark Parkinson painted a bleak future for skilled nursing in America on a Monday conference call with reporters.

“It’s our opinion that if in fact these provisions stay in the legislation, and there are absolutely no changes at all, the long-term impact of these will be debilitating to the sector,” Parkinson said.


Parkinson took aim at the Senate bill’s Medicaid plan, which would switch the rate at which funding grows over time. The House bill tied growth to the more generous Consumer Price Index for medical expenses (CPI-M), while the Senate seeks to tie it to the slower-growing Consumer Price Index for all urban spending (CPI-U) starting in 2025.

The team at the Washington, D.C.-based skilled nursing trade group crunched the numbers over the weekend and determined that the CPI-U will grow about two percent slower than the expected increases in Medicaid spending — a number that will compound each year the gulf exists, Parkinson noted.

By 2035, or a decade after the lower rate took effect, individual SNFs would face average Medicaid funding cuts of $600,000 each year in 2016 dollars, a devastating factor for facilities that make about $150,000 to $200,000 on average, Parkinson said.


He also criticized the Senate bill’s cap on the provider assessment program, which allows SNFs to receive revenue matching of up to 6% from the federal government.  The American Health Care Act would lower that amount to 5% — a move that would cut an additional $100,000 a year from the budgets of SNFs in the 28 states that currently allow matches of 6%.

Taken alone, just one of these changes would have been enough to cause serious alarm in the industry, Parkinson said. But taken together?

“You end up with a situation that’s just not sustainable,” Parkinson said.

While 2025 and 2035 still remain years out, states could start preparing for upcoming cuts by reducing Medicaid funding for SNFs and other long-term care options as soon as next year, he added.

“They’ll start to make the decisions even in 2018 and 2019 to prepare for the real caps that occur in 2020 and 2021,” he said. “So I think there will be some pain in the early years, and then the dramatic reduction that occurs in 2025.”

No Silver Lining

Pressed to name even a single thing about the bill that AHCA could praise, Parkinson came up with none. He also rejected the notion, reported in recent weeks, that the per-capita Medicaid caps instituted under the House and Senate health plans could lead states to transfer funding away from SNFs and toward home health care programs, which generally cost less than institutional care.

“These are people that have enormous challenges every single day,” Parkinson said of SNF residents, many of whom require assistance with basic tasks such as eating, bathing, and walking. “Any thought that we can just fix this by moving people at home, and it’ll be a lot cheaper — it’s just not realistic.”

Parkinson and the AHCA will continue to focus their efforts on the handful of Republican senators who have indicated skepticism about the bill’s impact on Medicaid, including Sen. Dean Heller of Nevada and Sen. Susan Collins of Maine.

Despite scattered criticism from the bill from within the party — and unanimous condemnation from Democrats — Republicans remain set on holding a vote before Congress recesses for the July 4 holiday. Both sides had been waiting in part for a score from the nonpartisan Congressional Budget Office, which found that 22 million Americans would lose health insurance under the plan by 2026, according to early reports as of press time Monday, or about 1 million fewer people than the House’s version.

Though his comments were full of gloom, Parkinson remained optimistic that the senators would change course once they fully understand the ramifications of the bill, saying certain unnamed lawmakers didn’t realize the scope of Medicaid cuts until his organization presented them with specific data.

“We genuinely believe that if the senators had any idea of the extent of the impact on each building in the country, that they would never have been proposing this,” Parkinson said.

Written by Alex Spanko

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