Sequester Cuts and Long-Term Care in New York

The sequester cut deadline came and went late last week without action in DC. This will not come as a surprise to observers of the situation, but that doesn’t mean the unrolling of the cuts did not cause severe worry and concern for those affected. One group that is raising alarm about the possible consequences of keeping the cuts in place is the long-term care industry. In short, the industry is set to lose millions of dollars in reimbursements, and many are concerned that the losses will affect the quality of care provided to all in the homes, including current residents.

AQNHC Care Report
Last week, in anticipation of the sequester cuts, the Alliance for Quality Nursing Home Care (AQNHC) released a report which demonstrated how the Medicare cuts included in the automatic budget reductions will affect traditional nursing homes. Most long-term stays at nursing homes are covered under Medicaid (not Medicare). However, shorter, rehabilitative stays connected to a hospital discharge are covered by Medicare. Right now, if no compromise is reached on the sequest cuts, then an across the board Medicare cut of 2% will take effect on April 1st.

Therefore, these skilled nursing facilities will be affected by the sequester. The AQNHC report noted that those cuts may eventually total nearly $783 million annually. In other word, because of the sequester the nursing home industry may receive more than three-quarters of a billion dollars less in government reimbursements annually.

As summarized in a McKnights story on the situation, the AQNHC report further explained that certain locations stand be be hit far harder than others–New York is near the top of the list. Because of the state’s expansive support services and larger population, our state was singled out as in the top five of those affected by the cuts. The state stands to lose nearly $47 million in Medicare support to skilled nursing facilities annually. It is easy to see how care for all nursing home residents–even those in the facility on Medicaid–might be affected when the facility is forced to make cutbacks to account for those reductions.

The End Game
As it stands now, no one is certain how the situation will be resolved. Neither party wants the cuts to last indefinitely, but there is sharp disagreement on the best alternative. The main issues are deciding what cuts to actually make permanent and whether or not revenue increases will be part of the solution. In the meantime, the cuts will begin unrolling in the coming weeks, possibly leading up to a “government shutdown” later this month. Some insiders suggest that this “shutdown”–not seen since the mid-90s–may be the final incentive that pushes the parties together to reach an agreement.