Wednesday, May 25, 2011

Setting the Record Straight

After an article in the New York Times was published last week regarding the upcoming effect of the employer mandate on nursing homes and home care services, many outside groups mischaracterized AHCA as opposing health care reform and seeking exemptions on the provision.

Governor Mark Parkinson, President & CEO of AHCA, sat down with Phil Galewitz of Kaiser Health News and had the opportunity to set the record straight. As the governor points out, the employer mandate provision will be challenging for a minority of nursing facilities, especially those that overwhelming serve Medicaid populations. These facilities are typically in rural areas or poor, urban areas.

With many states implementing or proposing large cuts to Medicaid, this makes it all the more challenging for facilities to provide insurance coverage to employees. So as Governor Parkinson clarifies, AHCA is working through the regulatory process to make sure these facilities can continue to serve those in need:
“…we are working with the [Obama] administration to figure out if there is some accommodation that can be made for these very high-Medicaid-population facilities so that they can be also in compliance with the law.”
Governor Parkinson also talked about the many other issues the long term and post-acute care profession is facing currently and moving forward, including state Medicaid cuts, managed care plans and the overall financial health of the profession.

Here’s the interview, as printed by Kaiser Health News:

Galewitz: What is the position of the association on the employer mandate and the impact it will have on the nursing home industry?

: We supported the Affordable Care Act and we continue to do so. The employer mandate is very manageable for the vast majority of our members. I think all of our providers want to provide health insurance for their employees. The challenge is that a minority of our members -- those nursing homes that tend to be in rural areas or very poor urban areas and have a disproportionate share of Medicaid residents (which frankly they lose a lot of money on) -- those are the members that find it challenging to provide health insurance, insurance that would meet the standard of the Affordable Care Act.

So we are working with the [Obama] administration to figure out if there is some accommodation that can be made for these very high-Medicaid-population facilities so that they can be also in compliance with the law.

The employer mandate issue is a challenge not just for restaurants and retailers, but for a small segment of the nursing home population, it is an issue as well. The administration has indicated that it is interested in our comments and our thoughts.

Galewitz: Why did your association support the health care law, particularly as the industry doesn’t gain by the reduction in uninsured? And do you have any regrets?

: No. There are no regrets. On balance the membership felt the Affordable Care Act was an improvement on the current health care delivery system. Whether you support the Affordable Care Act or not, when you look at the status quo you know the growth we have had on health care costs is simply not sustainable. We have to make efforts to bring those costs under control because there is a limited amount of money that society is going to be willing to spend on health care financing whether on Medicare or Medicaid.

Although we did not receive some of the direct benefits that you may argue that other sectors of the health care industry received, we are part of the overall health care world and if costs don’t come under control generally, then our sector can’t succeed either.

Galewitz: What is biggest impact of the law on nursing homes?

Parkinson: The potentially largest impact has to do with changes in payment models that may be developed with accountable care organizations and the continued move by the federal government to shift to episodic payments for post-acute residents, perhaps on a bundled basis. That is really an area of the Affordable Care Act that offers an opportunity for a cost savings.

The current system of reimbursement is on a daily basis. The longer you are in post acute setting, the more it costs. The Affordable Care Act provides the Health and Human Services secretary an opportunity to develop regulations to shift those incentives to payments based on performance and quality. If we head to a system like that, it could reduce costs. With ACOs, it's very critical that our membership has a seat at the table because we are concerned that ACOs will be created that will leave out nursing homes as a post-acute provider and if that would happen it would be quite bad for the sector.

Galewitz: How is the nursing home industry faring as states move to cut Medicaid costs to balance their budgets?
Parkinson: Nursing homes are struggling with Medicaid payments. The headline news early in the year is that there would be dramatic cuts at the state level for nursing homes and unfortunately that headline has proven to be the case. I don’t think nursing homes havebeen targeted. It’s because of the general fiscal situation that states have faced. In many states, our association and members were able to reduce the initial size of those proposed cuts, but there are still states out there where cuts are very significant.

Galewitz: Do you welcome the growing trend of states to shift their Medicaid long-term care recipients into private managed care companies?

: Conceptually, it is both good and bad. Moving the program to a group of entrepreneurs who may have more ability at cost cutting and efficiency, that is attractive. On the negative side, what it is doing is creating another layer of infrastructure before payments get out to the facilities. There are mixed results.

Federal officials have said that because a new payment formula this year led to an unexpected spike in Medicare costs, it might cut nursing home rates 11.3 percent. But they have also said they may increase Medicare rates.

Galewitz: How would you describe the financial health of the nursing home industry?

: If we had some certainty about what our Medicare reimbursement rates would be at the end of year, I could answer in better way. Going into the year if we were to poll our membership, most would say we are doing OK for now. We are at our historical margins of 2 percent. For now, everyone is worried what happens this year and next year.

If we have a one-time 11.3 percent decline, then the state of the profession will not be healthy. If it is something less or something phased in over three years we will be back to a position where the profession is in OK shape.

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