Nursing Home Industry: New Funding Reductions Will Force Closures

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Industry leaders say the nursing home industry could be at a tipping point.

"The nation's nursing homes are perilously close to laying off workers, cutting services - possibly even closing - because of a perfect storm wallop from the recession and deep federal and state government spending cuts, industry experts say," The Associated Press reports. "A Medicare rate adjustment that cuts an estimated $16 billion in nursing home funding over the next 10 years was enacted at week's end by the federal Centers for Medicare and Medicaid Services." This move came in addition to state-level reductions or flat-funding "that already had the industry reeling. And Congress is debating slashing billions more in Medicare funding as part of health care reform."

The crisis is compounded by an aging baby boomer population. "The nation's 16,000 nursing homes housed 1.85 million people last year, up from 1.79 million in 2007, U.S. Census Bureau figures show. Already this year, 24 states have cut funding for nursing home care and other health services needed by low-income people who are elderly or disabled, according to the Center on Budget and Policy Priorities, a nonprofit research firm based in Washington, D.C." Officials at some facilities say they have closed because of inadequate Medicaid reimbursement rates. "Medicare cuts are troubling, they say, because the higher Medicare reimbursements have been used to compensate for the lower Medicaid rates" (Collins, 10/4).

This information was reprinted from kaiserhealthnews.org with kind permission from the Henry J. Kaiser Family Foundation. You can view the entire Kaiser Daily Health Policy Report, search the archives and sign up for email delivery at kaiserhealthnews.org.

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