Category Archives: Medicare Cuts

Enitlement Reform Options: The Clear Leaders

While it appeared a “Grand Bargain” was conceivable following the 2012 election, the unfortunate fact in the wake of President Obama’s ideologically combative State of the Union speech — and other recent smoke signals from Senate leadership offices — is that we’re headed for another depressing, budget crisis-to-budget crisis session of Congress at least through the 2014 mid-terms.

Despite the odds of major entitlement reform are now far less than 50/50, Politico, National Journal and other new reporting indicates there are several structural savings opportunities through proposals already on the shelf at influential progressive think tanks in Washington. The menu is as follows:

Social Security: ‘Chained CPI’ — Savings: $112 billion

The idea is to change the way the government figures out how much more seniors should get in Social Security benefits each year to account for changes in their cost of living. This new formula — a tweak to the consumer price index — would assume that people switch their buying habits when prices rise, rather than just buying the same things over and over. So, for example, if the price of ground beef goes up, someone might buy chicken or fish instead. The result: Social Security benefits will rise more slowly.

Social Security: Lift cap on taxable earnings – Revenues: $500 billion or more

Even if the Democrats accept chained CPI, they’re going to want something in return. One big one: Let the highest earners pay more Social Security payroll taxes. Lift the cap so 90 percent of all Americans’ earnings are taxed — it’s only about 83 percent now — and a Social Security deal could raise about $550 billion in revenues over the next 10 years, according to estimates by Third Way, which has endorsed the approach. It would also wipe out Social Security’s deficit through 2020.

Medicare: Expanded means testing — Savings: $20 billion

Obama has said he won’t consider Medicare changes that would shift costs to seniors, but an expansion of the program’s means testing is the one benefit cut Democrats have hinted they might accept <http://politi.co/WfWdNI> — because it would hit wealthier seniors and spare the rest. There’s already some means testing of premiums for Medicare coverage of doctors and prescription drugs, thanks to Obamacare and the 2003 law that created the Medicare prescription drug program. The version that Obama proposed in his 2011 deficit plan and could put on the table again, would extend that means testing to charge higher premiums and hit a larger group of seniors.

Medicare: Faster payment reforms — Savings: $10 billion

Republicans often complain that Democrats don’t want to make any real changes to bring more money into Medicare — they just want to keep cutting payments to providers. But there’s no real controversy over Obamacare’s incentives to provide more efficient medical care, and that’s where some on the left think there’s potential for common ground — by just beefing up those experiments.

Medicare: Drug rebates — Savings: $135 billion

One of Obama’s biggest Medicare savings ideas would come straight out of the pockets of drug companies — which means he’d face a fight, but probably not from Democrats. Right now, pharmaceutical companies have to pay a rebate when the government buys prescription drugs for people on Medicaid but not for low-income seniors who qualify for both Medicare and Medicaid. The proposal, which Obama included in his deficit plan, would make the drug manufacturers give the same rebates for these “dual eligibles,” adding up to huge savings for Medicare.

Romney Achieves Parity on Medicare With Obama

Despite DCSpectator’s prior skepticism that the GOP in general and the Romney campaign in particular could achieve a level of parity with the Democrats on the issue of protecting Medicare, Kaiser data suggests the Romney campaign has largely succeeded.

Even though seniors reject the Medicare-reform proposal Romney has endorsed, Kaiser finds, they trust him more than they do President Obama when it comes to the future of the program. Forty-eight percent of seniors trust Romney, compared with 43 percent who trust Obama.

Compare that to the numbers on policy: 72 percent of seniors think Medicare should stay as it is, while only 18 percent would prefer the Romney system.

Seniors are a key part of Romney’s coalition, and Democrats had hoped they could use Romney’s Medicare positions to their advantage with that segment of the electorate.

It remains to be seen, however, how the issue plays in the toss-up Senate and House contests.

Medicare Issue Turns Against GOP

When Mitt Romney selected Paul Ryan as his Veep nominee, and initially seized the offensive on Medicare by charging “Obamacare” was funded by actually siphoning-off Medicare dollars, too many GOP consultants rejoiced prematurely.

One NRCC operative was quoted as predicting the Democrats would retreat on Medicare, and that the GOP had turned a corner on the always controversial and dangerous issue. As Charlie Black noted, if we could ‘break-even’ on Medicare, we’d be doing quite well.

But that was then. Now? GOP candidates are well advised to fight back on the issue, but not lead with it.

That was always the best approach, and the initial glow of the first Ryan offensive has clearly worn off.

POS/Hart Survey Underscores Potency of Attacking Lawmaker Votes to Cut Medicare

As the U.S. Senate and House of Representatives begin making crucial budgetary decisions for FY 2013, a recent survey conducted for the Alliance for Quality Nursing Home Care by Public Opinion Strategies and Hart Research Associates underscores the saliency political operatives find in attacking incumbents who expose themselves to such attacks by supporting Medicare cuts — in this case to nursing homes.

The survey (January 26-30, 800 RV’s [700 landline/100 cell] +/- 3.46%) finds 82% of RV’s oppose reducing Medicare funding for seniors’ nursing home care; 90% say funding for U.S. nursing home care should either “remain the same” or “increase”; and, interestingly, a full 69% support the concept of phasing-in a controversial 2011 Obama Medicare regulation that reduced Medicare funding by 11.1% all at one time.

With Republicans and Democrats both suffering major losses in back to back congressional elections — as each side in successive cycles absorbed attacks ads accusing incumbents for cutting seniors’ Medicare benefits — it’s no surprise both sides are circling each other warily as the FY 2013 budget negotiations take shape.

Private polling done for a health care provider group in Texas last year, as well as polling conducted for the Texas Tribune, found cuts to seniors’ nursing home care are among the most unpopular cuts of nearly a dozen options mentioned. This is not lost on ad makers, pollsters, campaign operatives and lawmakers themselves.

Wyden Says Dem Outrage Over Teaming With Ryan on Medicare Will Subside

Senate Democrats on Capitol Hill were more than miffed at Sen. Ron Wyden’s (D-OR) decision to join Republican Paul Ryan on a new Medicare reform plan. But Wyden says the negative criticism will subside once the plan is actually reviewed.

But that’s not likely in this hyper-partisan environment — and especially because it dilutes the attacks the DCCC and DSCC hoped to use (and will still use) against GOP candidates who had expressed previous support for the first Ryan plan earlier this year.

“There’s no question that when you try to break the gridlock and in this case for the longest running battle since the Trojan War, you stir a lot of passions,” Wyden told POLITICO. “My hope is in the days ahead that folks are going to read it.”

Not likely. House Minority Leader Nancy Pelosi suggested that the Wyden-Ryan plan would allow Medicare to “wither on the vine,” and White House spokesman Jay Carney said it was just another plan to “end Medicare.”

Health Providers Must Emphasize Cost-Efficiency in FY 2012 Budget Debate

Capitol Hill lawmakers, regulators and the media have heard it all before at the onset of the annual budget dance: No cuts to Medicare — especially as state budgetary chaos has eroded Medicaid funding stability. With the 2012 budget debate about to get underway on Capitol Hill, the nature and composition of the new Congress — with an eye on spending cuts — will require health care providers of every stripe to emphasize how they’re part of the solution when it comes to saving tax dollars.

As Skilled Nursing Facilities (SNFs) are the dominant provider of Medicare post-acute services, a recent Health Affairs article, “The Revolving Door of Rehospitalization From Skilled Nursing Facilities,” corroborates the general viewpoint that care quality and spending efficiency can be enhanced by policy reforms.

States the article, authored by Vincent Mor, Orna Intrator, Zhanlian Feng, and David C. Grabowski: “Payment incentives in Medicare do not encourage providers to coordinate beneficiaries’ care. Revising these incentives could achieve major savings for providers and improved quality of life for beneficiaries.”

An Avalere Health study conducted for one major provider group, the Alliance for Quality Nursing Home Care, echoes this sentiment in terms of possible savings: “Health policy experts view many of these [rehospitalization] incidents as preventable — to the tune of potentially $12 billion in annual savings, according to the Medicare Payment Advisory Commission (MedPAC).”

It further suggests “studying the sector can provide a unique window into addressing rehospitalizations, and that potential strategies to reduce this growing phenomenon can help sustain ongoing improvements in nursing home care, in addition to saving tax dollars.”

The first quarter 2011 health policy debate — with its inherent savings discussion — will be fertile ground upon which to advance SNFs’ and others’ public policy objectives in terms of making “savings” a central messaging thrust. Gordon Hensley

Houston Chronicle: Nursing Homes Merit Higher Priority During Hurricane Season

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Here’s the latest op-ed authored by Strategic Media, Inc. for a client, the Texas Health Care Association (THCA), appearing in the Sunday, July 11 edition of the Houston Chronicle:

Nursing Homes Merit Higher Priority During Hurricane Season

By TIM GRAVES AND GREG LENTZ

July 11, 2010

As the Houston area approaches the heart of hurricane season, there are several lessons learned from our trying experiences with Rita and Ike. Chief among these lessons is that ensuring our most vulnerable citizens’ safety is a priority during a major storm. Although there has been progress working with state lawmakers on transportation issues, there remains room for improvement in terms of how we will improve access to buses and emergency vehicles to ensure residents reach safety as quickly as possible.

Beyond transportation concerns, we had extreme difficulty during Hurricane Ike ensuring that electrical power was restored to facilities throughout the area. No doubt it was an enormous undertaking to restore power to the three million individuals in the area. But it is essential to view nursing homes as a priority in the same manner hospitals are viewed as a priority. Our facilities provide complex care services as well as around-the-clock care. Unfortunately, however, nursing homes have typically been viewed as residential — in other words, not a paramount priority when it comes to restoring power. On policy grounds, there are no logical arguments to justify this difference in status.

Historically, nursing homes have been expected to take care of themselves when it comes to weather emergencies. The situation in Ike’s troubling aftermath was challenging, and truly heroic efforts were taken by nursing homes to ensure residents retained 24-hour access to care. Long-term care facilities along the vulnerable Gulf Coast have instituted important life-saving disaster contingency plans to ensure critical health care services are continually provided throughout the ordeal — regardless of whether the facility is completely evacuated out of harm’s way, or shelters in place. During Ike, for example, 86 of the state’s 1,144 nursing homes, affecting 20 counties, were evacuated — impacting approximately 7,000 elderly patients.

Nursing facilities generally evacuate 72 hours before a disaster strikes. Both buses and ambulances are necessary to transport patients beyond the storm’s reach. Other expenses incurred by evacuating facilities include lodging for additional staff and their families, overtime and emergency supplies. Likewise, facilities sheltering in place have additional expenses such as generators, fuel, ice, water, additional food for staff and their families and day care for staffers’ families. Costs simply to evacuate a single nursing home can run from $75,000 to $100,000.

When sheltering in place, the generators necessary to fully power a nursing home cost approximately $70,000 each, and burn 10 gallons of diesel fuel per hour to run air conditioning. Therefore, as a result, both for-profit and nonprofit long-term care facilities urgently required immediate help with transportation and other disaster-related expenses. Yet, under the Stafford Act, for-profit long-term care facilities are not authorized to access federal assistance. Under current law, inexplicably, for-profit long-term care providers are precluded from accessing this funding. In Texas, only 14 percent of all nursing facilities are not for-profit. In short, current federal policy is ill conceived and merits immediate reform.

Disasters wreak havoc indiscriminately, damaging for-profit and non-profit facilities alike. In many localities, for-profit nursing facilities may be the only long-term care provider available in an entire community. They, too, should be provided with equal access to federal resources. Yet the unfortunate backdrop for this entire discussion is that long-term care facilities are already facing the significant challenges of a historic state and federal funding squeeze.

In addition to the fact Texas facilities are now being forced to absorb more than $1 billion in federal Medicare cuts over 10 years, state leaders in Austin are considering $25.6 million cuts to Medicaid-funded nursing home care. It is clear we need to fine-tune the complicated state and federal disaster response process. We are pleased with progress to date working with state leaders, and will continue to work cooperatively to improve the overall process. However, in addition to improving access to federal disaster relief, funding stability from Austin and Washington in the context of Medicaid and Medicare funding, respectively, is a necessary prerequisite to progress in helping our residents and facilities in times of danger.

Tim Graves is president of the Texas Health Care Association in Austin; Greg Lentz is chair of THCA and president and CEO of Healthmark, operating eight facilities in the greater Houston area.

For SNFs, FMAP Extension Badly-Needed as State Medicaid Budgets Wither

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Putting aside the various policy benefits and liabilities associated with the respective Senate and House health care reform bills, currently buried in a snowdrift of indecision somewhere on Capitol Hill, the House bill’s temporary federal medical assistance percentage (FMAP) increase is a vital necessity to Skilled Nursing Facilities (SNFs) nationwide struggling with the most basic of business crises: Cash flow.

Specifically, the House bill extends the temporary 6.2% FMAP increase from the American Reinvestment and Recovery Act (ARRA) through June 30, 2011. While the provision is not in the Senate bill, President Obama’s FY 2011 budget proposal includes the FMAP provision.

SNFs are arguing, correctly, that disastrous state fiscal conditions and the subsequent pinch on state Medicaid funding merits more temporary federal help, as the sector’s operating margins are the lowest of any provider group. Providers at the state level are out early, notably in Texas, making the case that SNF funding is being squeezed much as it was a decade ago in the wake of 1997 BBA implementation. The result, then, was 15-20% of the SNF sector driven into bankruptcy, worsening patient care and many lost jobs.

In testimony yesterday at a Health and Human Service Commission (HHSC) hearing in Austin, TX on what appears to be likely state budget reduction options, the Texas Health Care Association (THCA) warned that any new cuts now to Texas Medicaid payment rates for nursing home care will confront the nursing home profession with what he called “dire financial consequences.”

Tim Graves, the THCA President, noted the Obama Adminstration has already begun to implement $725 million in federal Medicare cuts that went into effect (by CMS regulation) in October, 2009, and said Texas has historically relied upon federal Medicare funding to “prop up the already inadequate funding of state Medicaid rates that have not met the state’s own rate-setting methodology since 1999.”

Graves’ argument is one state lawmakers will and should hear as the state budget debates unfold throughout Spring 2010: “Before we engage in discussions about cutting Texas seniors’ key Medicaid-financed programs, we must look first at the fact nursing homes are already having to deal with a state and federal funding environment that squeezes facilities’ abilities to recruit and retain the high quality direct care staff that make the ongoing provision of quality care possible.”

Medicare Cuts in House Health Reform Bill Politically Unrealistic

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The health care reform bill (HR 3962) that passed in the U.S. House of Representatives by the slimmest of margins last week was dealt a serious setback this weekend when the Centers for Medicare and Medicaid Services (CMS) released a new study that, according to the Washington Post, “found Medicare cuts contained in the health package approved by the House on Nov. 7 are likely to prove so costly to hospitals and nursing homes that they could stop taking Medicare altogether.”

The lede of the Post story, entitled, “Report: Bill Would Reduce Senior Care” is brutal:

A plan to slash more than $500 billion from future Medicare spending — one of the biggest sources of funding for President Obama’s proposed overhaul of the nation’s health-care system — would sharply reduce benefits for some senior citizens and could jeopardize access to care for millions of others, according to a government evaluation released Saturday.

Following the taxpayer-funded abortion controversy surrounding the Stupak amendment, and the Democratic leadership’s need to retreat in order to pick up moderate Blue Dog support, the CMS study has enormous implications in terms of how a final bill will be shaped in Conference once a Senate bill clears the floor.

The fact the Post reported the House bill “would sharply reduce benefits for some senior citizens and could jeopardize access to care for millions of others,” has provided the GOP with yet another weapon to hammer marginal House and Senate Democrats, and another reason to vote against or be extremely leery of a final bill that slashes seniors’ benefits.

The CMS study is somewhat helpful to the Skilled Nursing Facility (SNF) sector’s effort to help ensure the $23.9 billion, ten year cuts contained in HR 3962 to help finance the package could be pushed downward more in line with the existing Senate Finance Committee package crafted by Sen. Max Baucus (D-MT).

Interestingly, in regard to the whole notion of “cuts” to Medicare needed to finance any final reform bill, Sen. Kent Conrad (D-ND) engages in a bit of selective memory by stating, ”I think we’ve got to be very careful about our language. There are no cuts in any of these bills. There are reductions in the increases that they’re scheduled to receive” (“State of the Union,” CNN, 11/15).

In 1996, when Republicans sought to trim the growth in Medicare spending, much like what is being attempted now by the Democrats, GOP Senate and House candidates — as well as presidential nominee Bob Dole — were skewered for “cutting” Medicare. Besides the burden of defending the steep costs of a health care bill, House and Senate leaders will inevitably be forced to deal with the political implications of cutting Medicare spending — or, more accurately, trimming the growth of the program. This will become a more significant issue once a bill, presumably, makes it to Conference. The bottom line it very unlikely the high level of Medicare spending reductions providers now face in the House bill will survive.