Praise for Medicare reform, groans for GAO medicaid report.

Last fall's comprehensive Medicare reform bill included benefits for long-term care, says the American Health Care Association (AHCA), which endorsed the legislation. Perhaps particularly dear to AHCA is Congress's authorization of a pilot project (involving up to 10 states) of criminal background checks of workers providing direct care to Medicare and Medicaid residents; AHCA has lobbied on this issue for years. In addition, law-makers required the establishment of a process to ensure that nursing home inspection appeals are decided in a timelier manner and penalties that could affect patient care are adjudicated expeditiously. The bill also extended by two years the moratorium on limits on the amount of many Medicare-covered therapy services.

AHCA praised the bill's partially federalizing drug benefit administration for those eligible for Medicare and Medicaid as a way to help states struggling with growing budget deficits and higher Medicaid costs. The association, however, was not pleased by a General Accounting Office (GAO) report that said states' budget crises have not largely impacted Medicaid payments to facilities. "Evaluating the extent to which Medicaid rates have been impacted by recent state fiscal pressures excludes a far more " relevant cost factor--the true cost of providing care consistently exceeds Medicaid reimbursement rates," said AHCA President and CEO Charles H. Roadman II, MD, CNA. AHCA says a new study (not yet released at press time) will show that Medicaid payments are now more than $4 billion short of the cost to provide care nationally on an annual basis.

Dr. Roadman acknowledged that the GAO, Congress's investigative arm, examined only what lawmakers had asked for, "... but our concern is that lawmakers conclude from this data that Medicaid is fiscally sound and patients are well served," he said. "In fact, just the opposite is true--Medicaid financing is not only dysfunctional, patients' care quality, and access to that care, is severely jeopardized by the status quo."

Dr. Roadman also criticized the report's "misleading at best" comment that Medicaid rates increased on average by an amount that exceeded the Centers for Medicare and Medicaid Services' (CMS) Medicare SNF market basket index: "The SNF market basket itself is badly flawed and does not appropriately reflect the rising costs it was purportedly designed to reflect--that of Medicare services. AHCA is on record since the inception of the SNF prospective payment system in detailing the underestimation of labor costs, capital costs, and provider liability insurance costs. The use of the SNF Medicare market basket to say anything about the ability of Medicaid to capture Medicaid costs is inappropriate and incorrect."

Flawed reimbursement system or not, funding increases are always appreciated, and weeks before the Medicare reform bill came to a final vote, AHCA and the Alliance for Quality Nursing Home Care announced that their members will dedicate about 80% of the recently implemented 3.26% Medicare funding adjustments to hands on caregiving. This includes salaries, benefits, bonuses, and payroll taxes for existing and new RNs, LPNs, and CNAs; recruitment and retention costs; and training programs (above and beyond those presently required) for these staff members, including work with quality improvement organizations (QIOs). Sen. Charles Grassley (R-Iowa) praised the decision: "The nursing home community put their money where their mouth is by committing to use billion s for handson direct care to residents."