As Gov. Quinn's proposed Medicaid reductions are debated, new study finds Illinois nursing homes suffer $28.8 million Medicare cut from new federal tax law

[April 11, 2012]  SPRINGFIELD -- As Gov. Pat Quinn prepares to detail specifically where and how he plans to find Medicaid savings in next year's state budget, a new Avalere Health analysis detailing the negative impact on skilled nursing facilities of so-called bad debt provisions in the Middle Class Tax Relief and Job Creation Act of 2012 finds that nursing homes in Illinois will suffer a $28.8 million Medicare funding reduction -- the third-largest cut nationally.

"Because Medicare and Medicaid together pay for the care of approximately 3 of every 4 Illinois nursing home patients, it is crucial to look at the cumulative impact Medicare and Medicaid cuts have on the ability of economically pressed facilities to sustain the delivery of high-quality care," warned Alan G. Rosenbloom, president of the Alliance for Quality Nursing Home Care, which funded the analysis.

On a policy basis, Rosenbloom also noted that the phrase "bad debt" is a misnomer, and he urged the Illinois congressional delegation to review the essential fact that the federal government itself prevents skilled nursing facilities, or SNFs, more commonly known as nursing homes, from collecting as much as 90 percent of SNF bad debt.

"SNFs have no legal recourse to collect ‘bad debt' from the Illinois Medicaid agency -- and is more accurately described as ‘uncollectible debt' as mandated by federal law," he said.

The table at right shows the top five state impacts on Medicare payments to SNFs resulting from the "bad debt provision" in the new tax law. (Amounts are in millions. Methodology notes are available at www.aqnhc.org. Asterisk indicates discrepancy due to rounding.)

State	FY 2015 Medicare bad debt payments: prior law	FY 2015 Medicare bad debt payments: current law	Impact of bad debt cut in new tax law
Florida	$181.8	$121.3	$60.5
Ohio	$88.1	$57.6	$30.5
Illinois	$84.1	$55.3	$28.8
Pennsylvania	$70.5	$46.3	$24.2
North Carolina	$65.5	$43.0	* $22.6

Rosenbloom pointed out that the U.S. SNF sector is already slated to absorb another $48 billion nationally in Medicare reductions in fiscal 2012-21 and that SNFs also remain disproportionately reliant on Medicaid as compared with other providers -- with Medicaid paying for 57 percent of patient days.

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The Alliance for Quality Nursing Home Care is a coalition of 10 leading post-acute and long-term care organizations providing skilled nursing facility, or SNF, care in approximately 1,400 facilities, in 44 states nationwide.

[Text from news release from the Alliance for Quality Nursing Home Care