Wednesday, May 18, 2011
Why Nursing Homes Want To Waive Goodbye to Reform Law
by Dan Diamond, California Healthline Contributing Editor
For nursing homes, it’s been a tale of two weeks -- and if last
The federal program currently covers about two out of every
week celebrated the best of times, this week may signal the
three nursing home patients, and an industry-backed
worst.
study reported that nursing homes lose more than $17 per
Medicaid beneficiary per day because of funding shortfalls. Many
Monday, May 8: providers kicked off National Nursing Home Week.
sector leaders say they're further troubled by bleak Medicaid
Monday, May 15: the New York Times broke a front-page
spending projections and the likelihood of future cuts.
story about how the nation's nursing homes fear for their survival
Nursing Homes Propose a Way Out
under the health reform law.
The concerns stem from the health care overhaul's insurance
The waiver issue came to a head because long-term care
mandate, and long-term care providers are pushing for federal
operators are extremely exposed to the individual mandate.
waivers or other protections. Pending HHS approval, the move
Under PPACA, organizations with at least 50 employees must
may reveal their wisdom or -- by inviting new industry scrutiny --
provide affordable health coverage to their workers or pay a
symbolize providers' foolishness.
penalty beginning in 2012. According to the Times, that penalty
Reform Law Tries To Alleviate Some Problems
could "easily exceed $200,000" per year for an average nursing
home. About one-quarter of nursing home workers lack health
Few doubt that long-term care providers face considerable
insurance, as do roughly 37% of home health workers.
challenges, partly because their patients have so many health
The American Health Care Association, nursing homes' chief
care needs. Poor, elderly patients who are eligible for both
lobby, detailed several industry-specific provisions in
Medicaid and Medicare require particularly expensive care. They
the Times. According to the AHCA's head, former Kansas Gov.
also represent an outsize chunk of the nation's health care costs;
Mark Parkinson (D), CMS should either:
a Kaiser Family Foundation study found federal spending on dual
I.
eligibles was $200 billion in 2005.
The Patient Protection and Affordable Care Act includes a
number of reforms intended to improve long-term care, such as:

A national, voluntary insurance program for functionally disabled
Allow nursing homes more time to comply with coverage
requirements;
II.
III.
Waive or reduce the penalties for financially strapped facilities; or
Let nursing homes take tax deductions for the penalties.
Advocates Blame the Profit Motive
people known as the Community Living Assistance Services and

Supports Program, or the CLASS Act; and
Underscoring the waiver request is that nursing homes, along
More funds for states that expand the percentage of their long-term care
with the rest of the long-term care sector, have a
spending on home or community-based services.
disproportionately large impact on the nation's health care and
PPACA also creates two centers -- CMS' Federal Coordinated
economy.
Health Care Office to align Medicare and Medicaid initiatives, as
The long-term care industry is now the nation's 10th largest
well as the Center for Medicare and Medicaid Innovation -- that
employer, responsible for more than 3.2 million jobs, up from 1.8
have the potential to improve dual eligible cost containment.
million jobs a decade ago. Long-term care facilities directly employ
And administrators haven't forgotten the ongoing importance of
more than 250,000 workers in California -- with a district-by-
long-term care. HHS last month announced a new initiative to
district breakdown of their economic impact available here -- and
help states improve delivery of care to dual-eligible patients and
the state has the most nursing facilities in the nation.
in-home care for the disabled.
But if business is booming, why can't the industry cover its
Yet long-term care operators say that health reform has yet to
employees' health?
make a dent in their problems. They also warn that their facilities
Some say that long-term care is overly guided by its profit
are strapped by low Medicaid reimbursement.
motive. Altogether, there are about 15,700 nursing homes across
the nation, and roughly two-thirds are for-profit. (For comparison's

U.S. health policy leaders might be hesitant to become a member of
sake, fewer than one-third of U.S. hospitals are for-profit.)
the Independent Payment Advisory Board, which was created under
A 2010 California Watch investigation found that hundreds of
the federal health reform law to make recommendations on reducing
California nursing homes cut staff or reduced wages despite a
Medicare. IPAB members would have to leave their current jobs to
2004 state law that was intended to boost nursing home wages
avoid conflicts of interest and would need to be willing to serve a full
and increase staffing levels.
six-year term. Jonathan Gruber -- a health economist at
Yet the industry suggests that many organizations are just
the Massachusetts Institute of Technology -- said the commitment
scraping by. Thirty-seven states -- including California -- have
would "effectively require giving up an academic career," which might
instituted taxes on nursing facilities in hopes of gaining additional
not interest many experts (Nather, Politico, 5/14).
Medicaid funds for their long-term care providers, who say that

Accountable care organizations' start-up and first-year expenses will
the bonus federal dollars are essential to operations.
cost six to 14 times more than federal officials originally
Critical Reaction May Shape Longer-Term Decision
estimated, according to a recent study by the American Hospital
Association. The federal health reform law requires federal health
While many long-term care leaders would prefer to offer health
programs to begin contracting with ACOs starting in January 2012.
coverage to employees, they say it's simply not feasible.
According to AHA's findings, implementing successful ACOs will cost
According to the administrator of one Oklahoma nursing home --
between $11.6 million and $26.1 million, depending on the size of the
which does not offer health coverage to its employees -- "We
hospital or hospital system taking part in the organization. In
could not provide health insurance to our employees and still be
comparison, CMS estimated a cost of $1.8 million in its proposed ACO
able to pay all our bills and make the payroll."
rule (Daly, Modern Healthcare, 5/14).
But others argue that nursing homes must do more.

In related news, 10 physician groups that participated in an ACO
Charlene Harrington, a professor at the School of Nursing at UC-
demonstration project recently said that the proposed rule for the
San Francisco, contended that it is "scandalous to have nursing
organizations carries too much financial risk. Geisinger
home employees taking care of people when they themselves
Clinic, Marshfield Clinic, Dartmouth-Hitchcock Clinic and other
lack coverage and go without care."
physician groups said they have "serious reservations about the
Harrington added that employees with health coverage would be
economics and the complexity" of ACOs under the proposed rule. They
more likely to receive treatment for illnesses and occupational
groups noted that they would not participate in the ACO program if no
injuries, ensuring that they would pass fewer infections to
changes are made. Last week, the American Medical Group
residents and provide better care.
Association also criticized the proposed rule, calling it "overly
Meanwhile, Neil Trautwein, a vice president at the National
burdensome" and "too difficult to achieve" (Evans, Modern
Retail Federation, said that nursing homes' reported request
Healthcare, 5/13).
"reaches new heights of chutzpah," given that long-term care

Comparative effectiveness research initiatives that are outlined in the
providers lobbied for the health reform law.
federal health reform law could reduce the level of investment in
According to CQ HealthBeat, Trautwein also argued that the
pharmaceutical research and raise the cost of developing new
nursing-home industry doesn't deserve a special carve out.
treatments, according to a report from the Center for Medicine in the
Trautwein said that if nursing home employees are deemed
Public Interest. According to CMPI, comparative effectiveness
exempt, "why not retailers, chain restaurants -- in fact, all
research initiatives could cause pharmaceutical research and spending
employers on down the line?"
on innovation development to decrease by $32 billion over a decade.
We'll see if long-term care providers back off their stance, as
The report also states that comparative effectiveness research could
critical reaction continues to build this week to nursing homes'
cause economic activity to fall by $4 trillion (Healthcare Finance
reported proposal. Meanwhile, here's a look at other stories in
News, 5/12).
health reform.
On the Hill
Challenges in Rolling Out Reform

Members of the Senate Health, Education, Labor and Pensions
insurers to spend at least 80% or 85% of their premium dollars on
Subcommittee on Primary Health and Aging recently debated
direct medical costs. Under the waiver for New Hampshire, the state
whether implementation of the federal health reform law would
will be allowed to gradually transition the state's insurers to the
increase the use of emergency departments. Although the overhaul
mandated medical-loss ratio over the next three years. In Nevada, HHS
included increased funding for community health centers as a means of
granted a one-year adjustment to the medical-loss ratio rules, allowing
easing ED crowding, lawmakers are concerned that individuals might
insurers in the state to spend 75% of their premiums on direct medical
continue to use hospitals for nonurgent care. Debra Draper -- director
costs (Baker, "Healthwatch," The Hill, 5/13).
of health care at the Government Accountability Office -- said that
In the States
community health centers are helping to divert ED use by educating
patients about services provided at the centers (Norman, CQ

Minnesota is struggling to develop the state-based health insurance
HealthBeat, 5/11).
exchange mandated by the federal health reform law. Minnesota
Sen. Bernard Sanders (I-Vt.) has introduced a measure (S 915) that
Republicans are feeling pressure to refuse to implement the exchange
would require all states to establish single-payer health care systems
and hope that the U.S. Supreme Court eventually rules the overhaul
beginning in 2013, and Rep. Jim McDermott (D-Wash.) has
unconstitutional. Meanwhile, Gov. Mark Dayton (D) -- who supports
introduced a companion bill (HR 1200) in the House. The measure
the reform law -- could offer his own proposal for an exchange.
would do away with some of the biggest changes required by the
Republicans are concerned about what an exchange implemented by
federal health reform law, including the creation of state-based health
Dayton would include, but also are worried that the state would get a
insurance exchanges. It is unlikely that the bill will become law, but the
plan from the federal government if it does not create its own exchange
measure has received support from National Nurses United,
(Gugliotta, Kaiser Health News/Washington Post, 5/16).
the California Nurses Association, AFL-CIO and the International



Last week, Washington Gov. Chris Gregoire (D) signed into law
Federation of Professional and Technical Engineers (Reichard, CQ
three of the measures to help the state comply with the federal health
HealthBeat, 5/11).
reform law: a bill (SSB 5445) to create the state's health insurance
Last week, the House Energy and Commerce Committee voted 30-
exchange; a bill (ESSB 5122) to extend insurance coverage to children
20 to approve a bill (HR 5) that would cap pain and suffering awards in
younger than the age of 26, remove lifetime benefit maximums and
medical malpractice lawsuits. The bill, sponsored by Rep. Phil
prevent insurance companies from denying coverage to people younger
Gingrey (R-Ga.), would cap noneconomic damages at $250,000 and
than age 19 because of pre-existing health conditions; and a bill (ESSB
protect pharmaceutical and device companies from facing punitive
5371) to provide an open enrollment period for residents younger than
damages on government-approved products that later harm patients.
age 19 to purchase insurance (Barr, Modern Healthcare, 5/12).
The bill is part of an effort by House Republicans to replace the federal
On the Campaign Trail
health reform law. It is expected to pass in the House but not the
Democrat-controlled Senate (Attias, CQ Today, 5/11).

On Monday, GOP presidential candidate and former House Speaker
Newt Gingrich (R) sought to clarify comments he made over the
Administration Actions
weekend on NBC's "Meet the Press" that some observers interpreted as

In April, HHS granted 204 waivers that exempt certain health plans
support for the individual mandate provision in the federal health
from coverage-level mandates in the federal health reform law,
reform law. In a video on his website, Gingrich said, "I am completely
bringing the total number of plans that have received the exemption to
opposed to the ObamaCare mandate on individuals," adding that he
1,372. The waivers have been granted to employers that offer low-cost
believes "it is fundamentally wrong and ... unconstitutional" (O'Brien,
health plans, or "mini-med" plans, and provide a one-year exemption
"Ballot Box," The Hill, 5/16).
from a provision in the reform law that prohibits caps on health benefits
In the Courts
(Pecquet, "Healthwatch," The Hill, 5/13).

In related news, HHS has granted temporary waivers to New

Two of the three judges from the Sixth U.S. Circuit Court of
Hampshire and Nevada to exempt the states from new medical-loss
Appeals in Cincinnati who will hear a Michigan lawsuit on the
ratio regulations in the health reform law. The regulation requires
constitutionality of the federal health reform law were nominated by
Republican presidents. In the case -- filed by the Thomas More Law
Center in Ann Arbor, Mich. -- a U.S. district court judge declared the
law constitutional, prompting the center to appeal the ruling. The
judges who will hear the case on June 1 are: Circuit Judge Boyce
Martin, who was appointed by President Carter; Circuit Judge
Jeffrey Sutton, who was appointed by President George W. Bush;
and U.S. District Judge James Graham, who was appointed
by President Reagan (Norman, CQ HealthBeat, 5/11).
Read more: http://www.californiahealthline.org/road-toreform/2011/why-nursing-homes-want-to-waive-goodbye-to-reformlaw.aspx#ixzz1Mty5VNq8