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). 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