Representative Ryan Delivers Medicare Cuts but What About Quality Care?

A plan to transform:

It bears repeating that the Medicare and Medicaid programs together pays for three out of every four residents living in a skilled nursing facility (SNF). Any proposal to redesign these programs will profoundly affect the lives of the program participants and reshape the entire long-term care services and supports industry.

Among other features Rep. Ryan's plan includes:

  • Gradually raise the eligibility age to 67 by 2034;
  • Cap Medicare spending growth at GDP growth plus 0.5 percent;
  • Turn Medicaid cover to the states in the form of a federal block grant (estimated cut to Medicaid spending by $810 billion over 10 years);
  • Future Medicare beneficiaries would be provided a sum of money - those under the age of 55 - to purchase either a private health plan, or the traditional government-administered program through a newly created Medicare exchange beginning in 2023. This is a premium support/voucher model and its implementation would end the Medicare entitlement as it has existed since 1965.

When does quality matter?

Placing aside the obvious concerns regarding the Ryan proposal (i.e. where would average Americans find the financial resources to pay the gap between their voucher and their actual expense) I wonder how this reform would impact trends to place expand existing (and create new) community based services and supports along with a desire to improve outcomes? There is little talk about this concern from Rep. Ryan or from the think tanks which support the plan.

Interesting research presented by R. Tamara Konetzka PhD, associate professor at the University of Chicago, sheds light on the complicated relationship between reimbursement and quality outcomes. Recognizing that SNF Medicare revenues subsidize low Medicaid rates (Illinois rate is lowest in the nation) Professor Konetzka studied the impact of the Medicare prospective payment system (PPS) implemented on SNF's in 1998 on quality of care. Interestingly, although no impact could be found among the Medicare SNF population outcomes, the long-term stay residents (whose primary payment source is Medicaid) experienced a great risk of urinary tract infections as well as pressure sores. Apparently, SNF providers reduced staffing needed to care for long-term care residents rather then risking poorer outcomes among the "more important" Medicare patients. At the very least, any proposal to restructure Medicare and Medicaid needs to be viewed from through this prism in order to consider indirect effects.

It also occurs to me that this voucher proposal may only exacerbate a long standing deficiency of the current system. Historically, federal agencies (e.g. CMS, MedPAC and MACPAC) have struggled to address the needs of older adult in a holistic manner. Not only elder advocates but the elder care industry has long desired greater coordination, and I wonder whether Rep. Ryan's plan would only further complicate matters? De-funding the current federal system in favor of  "pushing down" planning to the state level may lead to greater inefficiencies and not less.

This debate will rage on, as the Supreme Court takes on the health care law on Monday. What do you think?

Learn more on Twitter @aginginchicago




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  • In the state of Illinois, where inefficiencies are an art, I would not expect much.

    Medicare is already being defunded by the Obama administration, so everybody could end up a looser, which is the way with trickle-down government. All suffer equally.

    I think that if the Supreme Court finds the mandate from the federal government to buy something from a private company lawful, then we are a different country, where the flavor of the decade may decide we all have to buy pocket bibles or exploding Chevy Volts.

    Return the power to the people and get the government out of the health care biz, where its been distorting rates and services now for forty years.

  • In reply to Richard Davis:

    Mr. Davis,
    Thank you for posting your comment and your thoughtful reading of my blog post.

    You may want to read my blog post "Happy Anniversary" posted on December 14, 2011 for more information on the origins of the Medicare (and Medicaid) programs.

    In short, beginning in the early 1950's there was growing pressure to address the lack of health insurance for older adults. The insurance industry lacked interest insuring this segment and, as a result, Americans over the age of 65 were the LEAST likely to have access to ANY health care. The creation of Medicare was solely responsible for creating affordable and quality healthcare for America's older adults.

    Issues relating to the merits of the health care reform law and its constitutionality are beyond the scope of this blog, although the expansion of Medicaid would undoubtedly impact so-called "dual eligibles" (those who qualify for both Medicare and Medicaid). The outcome of that debate will no doubt direct the conversation about the future of Medicare and Medicaid.

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    Bruce Lederman has over 25 years experience in the senior care field as a direct care provider and thought leader. Bruce was CEO and president of his own firm that operated skilled nursing facilities in Illinois. He is a former nursing home administrator and has consulted to numerous elder care providers on planning for strategic growth as well as process improvement. Recently he served as board chair of CJE SeniorLife, a leading non-profit elder care provider in the Chicago area. Bruce is currently employed as chief strategy officer for a company providing skilled nursing services in communities throughout Illinois and Missouri.

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