Nursing home industry ready for battle over Medicare funding

The nursing home industry is facing a major test of its lobbying clout as lawmakers weigh whether to slash its Medicare funding.

Nursing homes got a pass in January when Congress approved a short-term “doc fix” for Medicare spending that left hospitals to foot the bill for the second year in a row.

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But there’s no guarantee that lawmakers will go down that route again, leaving long-term and post-acute care facilities at risk of a significant cut to their reimbursement rates.

Anticipating the fight, two leading industry groups merged this month under the banner of the American Health Care Association (AHCA), creating a united front for a sustained lobbying campaign this fall.

Mark Parkinson, the group’s president, hopes to win another victory for the industry by offering lawmakers a deal.

It goes like this: Non-hospital care facilities will generate $2 billion of their own federal budget savings over 10 years by reducing the number of patients they send back to hospitals.

If nursing homes fail to meet that goal, they’ll agree to lower fees to make up for the shortfall.

Parkinson said the group’s strategy of presenting lawmakers with policy solutions, rather than the usual refrain of “please don’t cut us,” has proven effective.

“A key Hill staffer told us that we didn’t get cut last time because we had alternatives, even if Congress didn’t use them. Lawmakers appreciated that were weren’t just over there complaining,” Parkinson said in an interview.

“I think it’s something that faces the reality up on the Hill,” he continued.

“If you don’t come up with solutions, you’re still going to be on the list for cuts. You’re just going to get them in ways that don’t work out well for you.”

The conventional wisdom in health policy circles is that Parkinson’s members are first in line to pay for the next doc fix, which Congress passes annually to prevent a massive cut to Medicare physician reimbursement rates. In order to prevent the fixes from increasing the deficit, lawmakers have to offset them with other cuts.

The August recess will give the AHCA time to ready its other proposals, including a plan to equalize payments for post-acute services regardless of the medical venue where they are performed.

Covering all of the approximately $20 billion needed for a one-year doc fix will be a stretch, but it’s unlikely nursing homes would shoulder the cost on their own. 

A top lobbyist for safety-net hospitals called the AHCA’s lobbying approach “unique.”

“We’re often asked on the Hill to come up with pay-fors, and it’s difficult for trade associations to do that because you don’t want to do anything to harm your members,” said Shawn Gremminger, assistant vice president for legislative affairs at America’s Essential Hospitals.

“It’s a unique position [the AHCA] is in. I’m not surprised they’re getting credit on the Hill for what they’re doing.”

The AHCA’s fight to avoid cuts comes as the nursing home sector undergoes enormous change.

Gone are the days when the elderly had no choice but to spend their later years in a nursing home.

The industry now encompasses a wide variety of medical venues, including skilled-nursing facilities, assisted-living centers and rehabilitation clinics.

Parkinson predicted that in the next 20-30 years, as the baby boomers age, the number of assisted living beds in the United States could double.

That development is likely to add to the AHCA’s power and influence in Washington.

After its merger with the Alliance for Quality Nursing Home Care, the AHCA now represents about 10,000 of the 14,000 nursing homes in the U.S., along with several thousand assisted-living centers.

Joining forces had advantages for both sides.

The AHCA now employs four outside consultants, including K Street shops BGR and Alston & Bird, and Democratic lobbyist Tony Podesta. Its budget has expanded, and a broader membership means more fly-ins on Capitol Hill.

The group also reaps the benefit of the Alliance’s long-established relationships with lawmakers.

Parkinson said the Alliance for Quality Nursing Home Care had nurtured “deep relationships” with congressional leaders, while the AHCA had kept close ties with members of the House Ways and Means and Senate Finance committees.

“There is some real synergy there,” Parkinson said. “We have set up a platform for success.”

Lobbying aside, the AHCA is focused on measurably improving the quality of its members’ care by reducing the use of off-label anti-psychotic drugs and lowering staff turnover. 

The group has set specific benchmarks in each category, and its staff talks with the Centers for Medicare and Medicaid Services on a quarterly basis to review the plan.

The initiative poses a major challenge for member facilities, which must abandon default procedures like readmitting patients to hospitals when there is confusion about their care. 

But Parkinson said he pushes quality in part to ensure members are prepared for new payment models. 

“We believe that payment systems will gravitate toward the lowest-cost, high-quality provider,” he said. 

“There are inefficiencies to correct. … We embrace the notion that you can lower costs and improve patient quality at the same time.”