Cuts will hurt care, nursing home industry says
(2/24/02 Atlanta Journal Constitution, GA) By Larry Lipman

Washington --- At Integrated Health Services, rehabilitation therapy sessions may be trimmed from an hour to 45 minutes. Or from five days to three days a week.

At the Joseph L. Morse Geriatric Center, it's the quality-of-life services that are likely to suffer: trips to the local arts center, nights out at local restaurants, or the monthly "bistro" where tuxedo-clad staffers serve upscale meals to residents and their families.

The industry calls it "the cliff." Unless Congress acts before Oct. 1, nursing homes will face a 17 percent cut in Medicare payments --- $3 billion a year --- that they say will threaten the quality and availability of care.

"I'm scared to death because what the president's budget said is that we're going over the cliff, and that's going to affect my mother, and your mother, and your grandmother," said Dr. Charles H. Roadman II, president and chief executive officer of the American Health Care Association, which represents about 12,000 for-profit and nonprofit long-term care facilities.

"These cuts amount to $60 per patient per day, and will threaten the quality of patient care, limit beneficiary access to needed services, and perpetuate the nursing staffing crisis by eliminating important health care jobs," he said.

Georgia's 316 nursing homes would see a $60 million reduction next year if the cuts take effect, according to the American Health Care Association.

The nation began rolling toward the cliff in 1997. Congress and the Clinton administration, faced with burgeoning nursing home spending, agreed that year on a new rate schedule that they estimated would reduce Medicare payments to the homes by $9. 2 billion over five years.

But when the schedule took effect, the actual reductions turned out to be roughly twice as deep. The impact on nursing homes was devastating.

More than 8 percent of the nation's 16,600 nursing homes were operating under Chapter 11 bankruptcy protection at the end of last year.

The Health and Human Services inspector general reported that more than a fourth of hospitals had more problems placing Medicare patients in nursing homes after the new payment schedule took effect.

Quality also suffered.

"The implementation of the new Medicare prospective payment system . . . was associated with a reallocation of nursing staff, characterized by decreased [registered nurse] hours for the majority of [nursing homes] and a heavier reliance on lower-cost nursing staff," according to a recent study by the University of North Carolina School of Public Health.

In response, Congress adopted laws in 1999 and 2000 that partially restored the cuts.

One provision increased payment rates 4 percent across the board. Another boosted one of the components in computing rates by 16. 6 percent. Yet another added a 20 percent increase in payments for patients requiring complex medical care such as ventilators and intravenous tubes.

But those increases carried expiration dates. The 4 percent and the 16. 6 percent boost are scheduled to expire Sept. 30. The 20 percent increase is supposed to be revised to affect only a small number of complex care patients. When that will happen is uncertain, but President Bush's budget anticipated it will be in the fiscal year beginning Oct. 1.

Mark McClellan, Bush's health policy adviser, said the increases "were always intended by Congress to be temporary," until a new payment structure could be devised.

But John Schaeffler, the American Health Care Association's vice president for legislative affairs, said the restructuring plan being worked on will increase rates for only a handful of categories while reducing complex medical care payment rates overall by about 20 percent.

Cuts in Medicare payments are felt by all nursing home residents, said Scott Boord, Morse's senior vice president and chief operating officer.

"We're so heavily regulated by the state and federal governments, we can't take any shortcuts in terms of providing the care they need," Boord said. "The issue is, what is the effect on everybody here?"

In addition to low Medicare and Medicaid payment levels, some nursing homes have been hit by skyrocketing liability insurance costs --- which jumped tenfold at Morse in three years --- and increases in property insurance, Boord said.

The combination of higher costs and lower payments means tremendous pressure to balance the budget. That means looking at some of the extra services such as the trips, the bistro dinners and family education classes in geriatric care.

"We never want to become a home that provides just the regulated services," Boord said.

"If Morse can't provide those value-added services that make this facility a resident's home, then we're no longer fulfilling our mission."

Adela Baldo, administrator at Integrated Health Services, a for-profit home, said she is worried Medicare cuts could mean reducing the level of services at the home for 120 patients.

Services would not be eliminated, but the amount of time given for each service --- such as rehabilitative therapy --- might be reduced, she said.

"I think sometimes they forget in Washington that we're dealing with human beings," Baldo said. "If they continue to not provide the money, how can I provide the quality therapists?"

Lack of money in nursing homes might result in the homes "pushing" patients out sooner than before, much like hospitals now release sick patients faster than in years past.

"We don't want to do that," Baldo said. "We can't cut corners. We need to provide these patients what they deserve, what they come here for."

Ironically, one extra that Morse might eliminate is a demonstration project to determine whether an automatic medication-dispensing machine can save the state money on medicines purchased by Medicaid.