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 Health Care Reform Saga Keeps Everyone Guessing

Providers are concerned about impact of funding cuts on care.

 Senior Editor

​Anyone searching for a final answer to the question of whether major health care reform legislation will happen this spring is probably suffering from whiplash syndrome. It’s been that crazy trying to figure out a logical conclusion to a possible once-in-a-lifetime, trillion dollar overhaul of the health care system.

Even for Washington insiders, there has been no certainty on what this spring would bring, just as there was no certainty concerning the issue over the past year. “Anyone who has said one thing has usually been proven wrong,” said a Senate Finance Committee staffer.

How It All Began

President Obama swept into office on the heels of a mantra to bring change to Washington, to fix a wide range of disparate problems facing the country. In fact, health care reform was the key domestic policy issue for most of Obama’s campaign for the White House, at least until the economy blew up later in the summer and fall of 2008.
 
Obama framed the health care situation as a crisis of its own, saying a major overhaul of the system was needed, not just piecemeal change, in order to provide health care to the 40 million some Americans without it and as importantly to rein in year-to-year premium cost increases crippling employers’ ability to provide employees insurance. He also declared a fix to health care vital to future economic growth, noting the size of the health care system in relation to the gross domestic product and the threat of continuing with no plan to save Medicare and Medicaid as the nation ages.

The core of the plans passed in the House and Senate, and now Obama’s own plan, would extend health insurance coverage to 30 million uninsured Americans over 10 years with a first-time mandate for nearly everyone to buy insurance and a host of new requirements on insurers and employers.

The package that is expected to hit the House in early spring will be less expensive than the $1 trillion House-approved bill from last year and will not contain a government-run insurance program to compete with private insurers. This may please moderates and upset liberals.

Where It Stands Now

The best way to look at the unsettled situation may be to outline the political logic prevailing in Washington, as Provider went to press, with a warning that any element could change at a moment’s notice.
 
President Obama is currently using all of his presidential influence, including making campaign-like appearances and personal cajoling on Air Force One, to win over recalcitrant Democrats in the House who are wary of supporting the Obama plan for philosophical and political reasons.

Obama undertook this effort, and even delayed an overseas trip by a few days, knowing full well that the fate of his health reform plans rested on his ability to sway members of his own party to back not only his plan, but the parliamentary maneuvering being considered to get the legislation passed. The House vote is mere days away, and even though Democratic leaders say they will have enough “yes votes,” there is no guarantee that the president will win.

Prior to what now appears to be an imminent conclusion to the reform effort, President Obama and selected congressional leaders from both sides of the aisle held a widely anticipated, televised health care summit. The public meeting put into focus the difficulties everyone has known about in private for getting a bipartisan reform package done anytime soon.

Simply put, most Democrats want to proceed with some version of the two bills they passed along party lines in 2009, which would give Obama the massive overhaul of the system he promised during his campaign for the presidency.

Republicans made it clear that despite some areas of agreement, the House and Senate reform packages are too massive, too expensive, and without the support of most Americans. Plus, they see possible political gain by denying its passage, as witnessed by successful Republican election results in gubernatorial and congressional votes in Virginia, Massachusetts, New Jersey, and elsewhere over the previous months.

Rep. Eric Cantor, the up-and-coming Republican leader from Virginia, put this sentiment in its baldest form during the summit by declaring: “We just can’t afford this [reform].”

The Obama Plan

Obama, for his part, has recently released his own reform plan, which looks a lot like the Senate health care reform bill that passed last year. This hasn’t pleased all Democrats in the House, but it is unlikely that if given a choice, Democrats will reject whatever the final Obama plan looks like, even if it strays from what liberals and moderate Democrats really want.

So, what does all this mean? Without getting into the arcane rules of congressional bill making, it is possible that the Democrats will push through a legislative package consisting of the main Obama reform plan (primarily the Senate bill) and a separate bill including policy changes demanded by the House.

The Democrats will have to do this by maneuvering parliamentary rules that allow for simple majority votes, called reconciliation, thus avoiding Republican filibustering, which would require 60 votes the Democrats no longer have to block.

Neither bill approved in Congress is good news for long term care providers. The glimmer of better news is that Obama’s proposal is based on the Senate version, which includes $14.6 billion in Medicare cuts for skilled nursing facilities (SNFs). These cuts would go into effect in 2012 via a productivity adjustment of the market basket rate as dictated by the secretary of the Department of Health and Human Services. By comparison, the House plan includes $23.9 billion in such cuts.

Francesca Fierro O’Reilly, senior director of government relations for the American Health Care Association (AHCA), says it is not clear what other policy changes currently in the Senate bill will survive. It all depends on how the situation plays out, and whether Democrats actually go ahead with the reconciliation option, but she expects it may come down to that. “I think that [reconciliation] is the vehicle, because they don’t have the votes otherwise in the Senate,” O’Reilly says.

Bruce Yarwood, president and chief executive officer (CEO) of AHCA, said the organization is working to advance a “reconciliation strategy” that would seek to improve the current reform proposal, namely by including some form of Medicaid relief—as long as the Medicaid relief is not used to justify higher Medicare cuts, and proceed with implementation of the resource utilization groups (RUGs IV) on Oct. 1, 2010, in a budget-neutral manner.

Proposals To Watch

Other key issues at play for long term care include:
  • Wyden MedPAC (Medicare Payment Advisory Commission) Amendment. This is part of the Senate bill and would require MedPAC to review and report on Medicaid funding when making recommendations about Medicare payments. This is viewed by industry supporters as an important first step in ensuring stable funding that will protect the quality of patient care.
  • Medicaid Nursing Facility Supplemental Payment Program. This is supported by provider groups since it would add $6 billion in Medicaid funding for long term care services over the next four years. The provision is part of the House reform bill. Specifically, it recognizes the chronic underfunding of Medicaid SNF care, which results in an estimated shortfall of more than $4.6 billion a year, or $14.17 per beneficiary per day. Another important part of a related House provision would require state Medicaid programs to report to the Centers for Medicare & Medicaid Services (CMS) information on how provider payment rates for covered services are determined.
  • Transparency. The House language to increase civil monetary penalties and other mandates is not favored by provider groups. The Senate plan for additional disclosure requirements is acceptable, long term care leaders say.

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A Little History

Before looking ahead too far, it may be helpful to look back for a quick moment. It’s safe to say the previous 15 months have been a roller coaster ride for health care reform, and for providers tracking the goings-on in Washington, that ride seems to have no end.
 
When last year started, Washington experts had good reason to think 2009 or 2010 would be “the” time for making major structural changes to a U.S. health care system plagued by high costs, the lack of coverage for millions, and uncertain government funding on a year-to-year basis.
 
When the dust cleared after the November 2008 elections, newly elected President Obama and victorious congressional Democrats were emboldened to make sweeping reforms. After all, Obama had made change the theme of his campaign, and health care reform topped his domestic policy agenda; in the minds of many Americans, it was the one day-to-day issue they wanted addressed in a timely and thorough fashion.
 
Little did anyone know that the 12 months between Obama taking the oath of office and the election of Republican Scott Brown to replace reform standard bearer Sen. Edward Kennedy (D-Mass.) would fail to yield a legislative proposal for Obama to sign.
 
After Brown’s win, the fate of reform came down to simple math. Even with a 59-41 majority in the Senate, the Democrats could not push through their proposals in the normal legislative manner without winning over one more vote to get back their super majority status of 60 votes (to break filibusters and other maneuvering by Republicans).
 
This fact put in doubt everything that was sketched out over the previous months and now leaves many questioning whether Obama and his congressional lieutenants can achieve their reform goals.

Observers Comment

Edmund Haislmaier, senior research fellow in health policy studies, domestic policy, for the Washington, D.C.-based Heritage Foundation, firmly believes the Brown election was the signal event that derailed the chances for a comprehensive reform package.
 
 “The odds are against any major piece of legislation. There are a whole lot of these House Dems who would rather not have to vote for their own proposal,” Haislmaier says.
 
He expects stand-alone bills to emerge from Congress over the next weeks and months as it becomes less likely for an Obama bill to pass. Areas for possible legislation include insurance market reforms and fixing the much-discussed preexisting condition situation. What about long term care? It’s back to the future, he says, with congressional hearings on the White House budget plan. “This will fall back to the normal pattern, with tweaks made to Medicare in Congress,” Haislmaier says.
 
He notes that his prediction for the ultimate failure of the Obama plan is based mainly on the unexpected way the president ran the effort. “I was surprised how badly it was done. It was technically and politically incompetent. You had kind of campaign types spinning it,” Haislmaier said. He notes the most basic aspects of the Obama health care program remain incomplete, notably the fact that there remains no permanent CMS director as the administration works into its second year.
 
Lee Goldberg, policy director, long term care division, Service Employees International Union, was more confident that Obama will prevail in the end. “We are still hopeful this will go through,” he says. The big picture of the overhaul is appealing, Goldberg says, noting his group’s backing of provisions in the Senate plan for the CLASS Act, which seeks to allow people to participate in a new long term care insurance program.

Providers Waiting And Acting

Ted LeNeave, CEO of Roanoke, Va.-based American HealthCare, has been on a mission. Instead of just watching and waiting for results from the health care reform saga, LeNeave, his company’s employees, and patients and their families have blitzed congressional offices with direct appeals to minimize Medicare cuts for SNFs and also have worked on the state level for more Medicaid funding.
 
“We started a grassroots effort many months ago, using all of our 16 facilities and 2,000 employees for a letter-writing campaign,” he says. An initial two-day blast of such direct lobbying produced 5,000 letters to Congress, and a second effort months later pulled in another 5,000. “That’s 10,000 letters from employees, residents, and residents’ family members voicing our concern about cutting Medicare funding,” LeNeave says.
 
The point made in the letters, and in nearly every sentence uttered out of the CEO’s mouth, is that while he understands how tough it is to make decisions in Congress on health care matters, the results of tough decision making should not be based on cutting those that need the money most.
 
“I don’t envy them in their job, but I continually get tired of them trying to pay for everything on the backs of the elderly,” he says. “These are the people who fought in our wars, passed civil rights [laws], and paid for the buildings and furniture where the lawmakers work.”
 
Health care reform is not just something providers in the D.C. area monitor closely, because every Medicare dollar cut or policy changed puts the bottom line at risk for any operator, no matter its size or location.
 
One of those wondering about the fate of her business, and living a bit further away from the Washington area, is Linda Black-Kurek, president of Liberty Health Care Corp. in Dayton, Ohio, which runs 15 Liberty Nursing Centers in the state.
 
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She is straight on what she wants to see happen, which is nothing along the lines of the remedies on the table now. “I would like to see health care reform delayed as it is currently outlined,” Black-Kurek says. “The cuts to existing providers in order to fund coverage for additional beneficiaries do not make sense for the system as a whole. It will be difficult to continue to provide the services that are currently being offered.”
 
But what if reconciliation happens and the Obama plan becomes law? What keeps her up at night? “The Medicare payment cuts are of extreme concern. We have already experienced significant reductions in net payments on the Medicaid side, and to have additional cuts on the Medicare side would be very difficult,” Black-Kurek says.
 
She says further analysis is also needed on the implementation of the RUGs IV system. “It is supposed to be budget-neutral, but I don’t think the data have been analyzed by the industry to verify that. In fact, we think the system and rates as currently outlined involve additional cuts,” she says.

Medicaid Factors In

Working not far from LeNeave is Debbie Petrine, CEO of Commonwealth Care of Roanoke. She stresses the double whammy being pulled on providers from not only the continued threat of more Medicare cuts, but also the depressed state of Medicaid funding. “That’s a real concern,” Petrine says.
 
While she sees major problems with the way the system works now, it is not something she sees being fixed by the current legislation. “It is too far-reaching. Changes do need to be made in the system. We have a problem and need to deal with it, but such a massive overhaul is a concern,” she says.
 
Petrine has a different take on what concerns her about the proposals. Beyond Medicare cuts, she worries about the employee side of the equation and thinks any reform should include the opening of the interstate insurance markets. It’s all about costs and trying to provide employees with a benefits package to discover and retain talented workers.
 
“Companies should be allowed to go over state lines to buy insurance. If you can open that up and foster competition, that would help in both our rural and metro facilities,” she says.
 
“We pay a large percent of our employees’ coverage; they pay for family, spouse, children … we are continually looking for ways to keep these rates affordable,” Petrine says.
 
Something that Sen. John McCain (R-Ariz.) brought up time and again at the recent health care summit rang true for Petrine, which was the need to close so-called carve-outs in the health care legislation to protect selected groups. “I am concerned about large groups being carved out, like labor unions,” she says.
 
Obama seemed to agree with McCain over the need to eliminate any “deals” made for votes and to appease certain constituencies, but nothing has been hammered out in the proposals currently on the bargaining block.

Preparing For,  Fighting Against Cuts

LeNeave wants to change the way nursing facilities and their residents are perceived in Washington and, for that matter, in the state capitals as well. He believes that the fight against potential Medicare cuts should put SNF residents front and center, when possible, in order to show lawmakers who it is that will be affected by reductions in funding.
 
“Long term care has a stigmatism to it, but nursing homes have completely changed from years ago,” LeNeave says. “Look at the case of my mother. She went into a facility for rehab [after surgery] for two weeks, then back home. It was cheaper in the nursing home than in the hospital. Somehow, I think [lawmakers] look at nursing homes and the people in them as demented, with odor issues and eating problems,” he says. The truth is that nursing facilities provide great care, LeNeave says, and the people living in SNFs, assisted living facilities, and other care centers represent a range of demographics and health and care needs.
 
“We would get a lot more [positive] attention if the actual person affected [nursing resident] was speaking up. Right now, it is the employers speaking up,” he says, which puts long term care at odds with how Congress works to understand issues.
 
As better ways to influence the political debate are explored, providers say now has also been the time to review options for controlling costs ahead of possible sizable Medicare cuts, though the economic slowdown has also been a factor in such planning.
 
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Belt-tightening Goes Only So Far

Black-Kurek fears for the worst, noting that previous funding cuts and the current economy have already forced changes to the way her facilities operate. “We have cut expenses already to a minimum. If we face additional Medicare cuts, it will be difficult to find more areas to cut without further impacting patient care,” she says.
 
Petrine echoes that sentiment, stressing that further cuts would force a review of other efficiencies, but there is a point at which enough is enough. “There is only so much you can do,” she says.
 
Across all their facilities, Petrine says 20 to 25 percent of residents pay through Medicare, and 60 to 65 percent with Medicaid. She doesn’t know if the industry is being singled out this time around, but it is clear to her that lawmakers need to understand that diminishing the role of SNFs is not good economics.
 
“Legislators don’t see how we are a lower-cost alternative to hospitals,” she says, adding that the rising number of seniors and increasing pressure on hospitals to move people out as quickly as possible make nursing facility care even more important than before.
 
For LeNeave, the thought of Medicare cuts has forced some real soul searching about the way his facilities function. In a process that has taken some time already, he says the company has reviewed its staffing model.
“Of course you want to hire more in good times, but when that ends, you have that extra staff still. You don’t want to let them go, so we started looking at where we are efficient and right-sizing the organization,” he says.
 
His review showed that from a clinical perspective, there were no areas to make cuts. The areas where some layoffs occurred were in the corporate offices, the roles that have an indirect impact on patient care. Other cost savings have come from utilizing technological advances and going paperless in record keeping and related areas.
 
A major change that has helped save money was investing in making improvements to facility common areas by bidding out remodeling contracts during the recession. “Contracted renovation is cheaper than ever with so many contractors looking for work in the recession,” he says. The improved look of the facilities in turn generates more interest from potential residents, boosting marketing efforts.
 
The company also went to suppliers and renegotiated contracts to trim margins and save money. LeNeave says these talks “were hard conversations” that had to be undertaken.
 
In the final analysis, he says, resident care rules cost-cutting decisions and will do so even if the Obama plan goes into law. “The cuts will not hurt the quality of care; residents will always get meals, of course, and other required services. But these cuts will affect quality of life, like our fine dining programs and activities,” LeNeave says.
 
“The fine dining that you have is like what you have at a restaurant, and costs a few hundred thousand dollars a year, but these are the things that really get [residents] excited.”
 
That is what pains providers, he believes: the thought of having to reduce the book readings, seasonal parties, and outings that make life special for residents. The crux of the matter is making quality more than basic care, making it extra attentive to the individuals entrusted to the facility’s care.

Conclusion Seems Near

Legislative sources, who work behind the scenes on health care for various committees, think too much has happened for Obama and the Democrats running Congress to walk away from the effort now.
 
“There is a real sense that this is it. The summit is over, and the attempt at looking bipartisan took place, so after a month or so, I think [the Democrats] will get this through on their own,” said a House staffer working for the Democratic side.
 
And, maybe that is what Republicans want too—a resolution—because once health care reform passes or fails, all eyes start turning to the November congressional elections and how lawmakers up for reelection will fare with voters across the country.
 
The doubters think the Democrats will pay this fall, after misjudging the country’s appetite for what they are being served.
 
Whatever happens, the way health care reform has progressed through the months has not surprised many people. Provider Black-Kurek certainly expected it, since the nature of Washington and the political wars are hotter than ever.
 
“It has not really been a surprise that the votes have been along party lines,” she says. “This has turned into a political battle.” And, expect more of the same; just don’t expect anyone to predict when it will end, one way or the other.
 
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