May 16, 2007

FOR IMMEDIATE RELEASE:

Contacts: Lauren Shaham, AAHSA, 202-508-1219

Statement from Larry Minnix, President & CEO, American Association of Homes and Services for the Aging, On the House Ways and Means Health Subcommittee's Hearing on Payments to Health Care Providers

Washington, D.C. – Quality in nursing home and home health care should be an automatic public expectation. The key to quality is strong staffing which requires, in part, the resources to pay workers better. Skilled nursing facilities and home health care providers need a payment update to ensure reasonable pay adjustments for staff.

The Medicare Payment Advisory Commission (MedPAC) has reported for the last two years that not-for-profit nursing facilities spend substantially more on nursing staff than for-profits and therefore have low to zero profit margins on the Medicare payments they receive. For 2005, MedPAC found that for-profit nursing facilities achieved margins of fifteen percent on the Medicare payments they received, while not-for-profits' margins were below five percent.

The proposed budget cuts for FY 2008 translate into the loss of $100,000-$200,000 annually for the average nursing home and much more for those that specialize in Medicare's high need patients. Adequate Medicare reimbursement makes a major difference to nursing homes' ability to recruit and retain staff, the single greatest determinant of quality of care.

Congress should require CMS to go back to the drawing board on the skilled nursing facility prospective payment system to ensure that it more accurately reflects the true costs of caring for frail elders. The system is based on Resource Utilization Groups (RUGs) that still do not accurately determine acuity of need and responsibly calculate the cost.

The home health industry needs sufficient funding to recruit quality staff, invest in telehealth technology and afford the inflationary increases in staffing and transportation costs. Eliminating the 5 percent rural add-on for home health agencies has already had a negative impact on rural home health agencies. Although AAHSA appreciates some of the changes in the new prospective payment system, we urge Congress to reinstate the rural add-on and address the recalculation of case mix.

We believe there should be two types of providers: the excellent and the non-existent. Any changes in reimbursement to nursing homes and home health care providers should reinforce this vision.

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About AAHSA
The members of the American Association of Homes and Services for the Aging (www.aahsa.org) help millions of individuals and their families every day through mission-driven, not-for-profit organizations dedicated to providing the services that people need, when they need them, in the place they call home. Our 5,800 member organizations, many of which have served their communities for generations, offer the continuum of aging services: adult day services, home health, community services, senior housing, assisted living residences, continuing care retirement communities and nursing homes. AAHSA’s commitment is to create the future of aging services through quality people can trust.