Study Spotlights Growing Role Of Medicare In Propping Up Nation's Medicaid Program

New BDO Seidman study of the nation's Medicaid program draws much needed attention to a chronic and worsening problem: Medicare's cross-subsidization of increasingly inadequate Medicaid payments for nursing home care.

Noting that the influential Medicare Payment Advisory Commission (MedPAC) is meeting in Washington this week to consider a number of Medicare funding matters, Alan Rosenbloom, President of the Alliance, urged the agency to consider more carefully the substantial Medicaid losses nursing homes face in formulating recommendations to Congress. He also urged Congress to evaluate the relationship between government payment programs -- which together pay for roughly 80% of nursing home patients -- in making decisions regarding Medicare payments to nursing homes.

"When assessing the adequacy of Medicare funding for the nation's nursing homes, and making subsequent recommendations to Congress, MedPAC should consider not only payments under Medicare, but also the substantial Medicaid losses in determining the financial health of nursing homes," Rosenbloom said. "By ignoring enormous Medicaid losses and focusing solely on Medicare expenditures, MedPAC's recommendations offer little practical guidance to Congress concerning the impact Medicare policy will have on the quality of care America's nursing home patients receive," continued Rosenbloom.

The BDO Seidman study, released by the American Health Care Association (AHCA), estimates that Medicaid pays some $4.4 billion less than the actual cost of nursing home care for the nation's seniors. This translates into $13.15 per patient per day less than the cost of care, an amount which has increased 45% since 1999.

"When it comes to making important public policy recommendations that truly impact the lives and well being of our nation's most vulnerable seniors, we believe MedPAC is obliged to evaluate the real and growing interdependence between Medicare and Medicaid -- and to base its recommendations to Congress not merely on the impact policy changes will have on Medicare expenditures, but also the impact those changes will have on all seniors who require nursing home care," Rosenbloom continued.

The Alliance President said the study underscores the importance of Congress taking a broader, more accurate view of patient needs by rejecting MedPAC's recommendation that nursing homes should not receive a 3.3% inflation payment update for FY 2008. "MedPAC's recommendation fails to consider that such substantial Medicaid losses offset Medicare gains. The result is that overall operating margins for America's nursing homes hover close to 3% -- far less than those of any other group of health care providers," Rosenbloom explained. "Congress must consider the overall long term care funding picture to ensure America's seniors receive the high quality nursing home care and services they deserve, and we urge Congress to reject the MedPAC recommendation," he concluded.