Why Trumpcare Could Shift Cash Away From Skilled Nursing Facilities

While the exact effects of the Senate’s version American Health Care Act remain to be seen, one leading home health care company says the legislation could shift dollars away from institutional care — directly contradicting an earlier report that indicated skilled nursing would represent a vital care option that states would be loath to take away.

For the skilled nursing industry, the impact of Congress’s proposed Obamacare repeal comes largely from the proposed switch to per-capita caps for Medicaid coverage, which would swap out the current open-ended federal funding system for a set, per-person amount for each Medicaid recipient. To account for the varying levels of care needs among Medicaid beneficiaries — including older Americans, lower-income adults, and people with disabilities — the exact dollar amount would vary based on five categories of care.

Under the House’s version of the bill, these caps would lead to $800 billion in Medicaid cuts; the industry and the country still awaits a score from the nonpartisan Congressional Budget Office, which should present a similar figure for the Senate plan. But no matter what the eventual dollar amount, a per-capita cap system would require states to make tough decisions about which types of care programs receive Medicaid dollars, and which don’t.

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Earlier this week, a study from LeadingAge and the Center for Consumer Engagement in Health Innovation hinted that the caps could be a boon for SNF operators.

“Per capita caps would cause a shift away from home and community based services (HCBS) toward institutional care such as nursing homes,” the report read, because Medicaid rules would still require funding for institution-based programs. Forced to cut dollars somewhere, states would naturally funnel more cash toward institutions, the organizations reasoned.

But one of the nation’s largest home health care companies, Almost Family (Nasdaq: AFAM), is more optimistic that restructuring Medicaid financing could give states more freedom to spend their dollars in the post-acute care space — and incentivize home care as a lower-cost setting over institutional care.

“While we have an outward concern at what could be a reduction in the provision of Medicaid benefits to the states, there could be a silver lining for home care, in particular personal care as well as skilled [home health], dependent entirely upon how the states administer their limited dollars,” said Denis Fleming, vice president of government relations at Almost Family. “The silver lining is in the value and quality of home care and its cost effectiveness in its relation to institutional care.

“States are looking at the savings systems to incentivize better care and keep costs down,” Fleming said. “Home care naturally becomes a good option.”

This gulf highlights the current confusion and anger in both the senior care industry and the general public. Mark Parkinson, the president and CEO of the American Health Care Association, made dire predictions for skilled nursing operators in his group’s official statement, released late Thursday night after the “discussion draft” of the Senate bill was released.

“We currently face a crisis in how to fund long-term care,” Parkinson said. “Today’s Medicaid system already underfunds nursing center care by $7 billion annually. Skilled nursing centers across the country operate on razor-thin margins. The additional cuts proposed in the Senate bill released today — including a reduction in provider assessments that alone will result in billions of dollars less to skilled nursing care each year — are deeply distressing.”

“As Baby Boomers increasingly rely on the health care system in coming years, our seniors deserve better than an unstable and underfunded safety net. We strongly encourage the Senate to protect Medicaid access for seniors and people with disabilities,” Parkinson said.

Written by Alex Spanko

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