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Medicare Cuts May Negatively Affect Nursing Home Residents

Thanks to a recent rate adjustment in the Medicare system, nursing homes will see a cut of $12 billion in federal funding over the next 10 years. As a result of the sizeable rate adjustment, many nursing homes are starting to worry about how they will be able to afford to provide high quality care for their residents receiving Medicare.

In addition to this recent rate adjustment, upcoming Congressional bills are proposing additional rate cuts that will negatively impact nursing home facilities that house Medicare participants. According to the American Health Care Association, a current proposal in the Senate is aimed to reduce nursing home funding across the nation by $14.6 billion. A current proposal in the House could cut funding by as much as $32 billion.

What do these nationwide cuts really mean on a micro level? Nearly 80 percent of nursing home residents are Medicare and Medicaid beneficiaries. For a nursing home facility that cares for 100 residents with just 14 of those residents receiving Medicare coverage, the nursing home might see a funding reduction of more than $81,000 with the recent cuts. In the event that the current House bill is passed, this size nursing home facility could see a funding reduction of nearly $160,000 each year.

Already, many nursing homes are operating on a profit margin of just 1 to 2 percent. Employee labor takes up approximately 70 percent of a nursing home’s cost of operation. As a result of funding cuts, nursing homes are likely going to need to reduce their skilled staff to limit expenses and stay in operation. Without the appropriate patient-to-staff ratio, many nursing homes worry about the quality of care for residents.

What can Medicare beneficiaries and their families do now to protect them? In light of the inevitable upcoming changes to Medicare coverage within nursing home facilities, many Medicare beneficiaries and their families should begin looking for alternative programs that can help them pay for medical expenses. Medicare Supplement insurance, for example, may help to cover the cost of many Medicare coverage gaps (or Medigap) that are not covered by Original Medicare plans.

Medicare beneficiaries should also ensure that they are enrolled in the right Medicare programs for their needs, as not all Medicare programs provide coverage for nursing home residency programs and associated requirements. It is important for Medicare beneficiaries and their families to speak with qualified Medicare advisors who can help to ensure that they are enrolled in the best Medicare programs for their needs.

If any changes need to be met, these changes should be made during the annual Open Enrollment period, which lasts from November 15 to December 31. Changes made to Medicare plans during this time will reflect on the Medicare plan for the upcoming year. As a result of the recent rate reductions, it is essential for all nursing home residents receiving Medicare coverage to evaluate their coverage options now so they are prepared for the upcoming changes.

You can get a Medicare Supplement quote or learn more about Medicare Supplement plans.

Wiley Long is founder and president of Medigap Advisors, and is passionate about helping people navigate the confusing waters of Medicare. He is the author of The Medicare Playbook: Designing Your Successful Health Coverage Strategy, a clear and simple explanation so you can make the most of your Medicare coverage. For more information visit www.MediGapAdvisors.com.

 

 
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