June 12, 2015
Contact: Eric Kiehl, 717-221-7935
Cell: 717-599-2077

Final Budget Must Protect Seniors, PHCA/CALM CEO Says

Legislation to protect skilled nursing facilities against predatory out-of-state attorneys advances in Senate

HARRISBURG — With just weeks remaining in the state’s fiscal year, Stuart H. Shapiro, M.D., CEO of the Pennsylvania Health Care Association and Center for Assisted Living Management (PHCA/CALM), is urging Gov. Tom Wolf and lawmakers to ensure any final spending plan includes a “market basket” or cost of living increase for nursing homes and once again funds a program that preserves access to care for the state’s poorest frail elderly and disabled residents on Medicaid.

“Pennsylvania’s skilled nursing centers are on a financially unsustainable path,” Dr. Shapiro said during the taping of a statewide public affairs TV program, which is set to begin airing this weekend. “Our population is aging rapidly and the demand for services is growing. But the cornerstone of our long-term continuum, skilled nursing facilities, is starting to crumble. We need to do all we can to ensure those in need have access to high-quality care.”

Pennsylvania ranks among the worst in the country with respect to Medicaid reimbursements, according to a study by Eljay LLC, a nationally recognized leader in long-term care consulting. Two-thirds of all nursing home residents in the state rely on Medicaid.

The commonwealth reimburses nursing centers an average of $23 a day less per resident than the true cost of care. That shortfall has almost doubled since 2007, when it totaled $13.23 per resident per day. With 65 percent of all nursing center residents relying on Medicaid to pay for their care, nursing centers now lose an average of $8,500 per resident every year on two-thirds of the individuals in their care. Pennsylvania’s Medicaid program doesn’t come close to covering the real cost of care.

“Over the years, the acuity (sickness) level of residents in skilled nursing center has increased,” Shapiro explained. “As the level of required care has risen, so has the cost to provide this care. Unfortunately, funding has not kept pace with costs, especially for those supported by Medicaid, putting nursing homes on a financially unsustainable path.”

PHCA/CALM is seeking an increase of 2.4 percent in Medicaid payments to nursing homes to cover the ever increasing cost of care. The 2.4 percent is the three year average “market basket” increase for nursing homes used by the Centers for Medicare and Medicaid Services (CMS) to set Medicare rates. The market basket represents how much more it would cost a nursing home each year to purchase the same mix of goods and services. This increase equates to $36 million in state funds, which will bring in an additional $40 million in federal funds.

Shapiro also called on the legislature once again to fund a program that it created last year to aid nursing homes that care for a higher-than-average percentage of residents on Medicaid. That “add on” program would cost the state $16 million, while bringing in an additional $17 million in federal funds, to ensure seniors on Medicaid have access to long-term care in the communities where they live.

“Many nursing facilities are struggling to survive,” said Dr. Shapiro. “Having already reduced staff or cut programs because of financial hardship, some are having no choice but to turn away some individuals on Medicaid because they can’t afford to care for them.”

Shapiro also provided an update on legislation that would grant to skilled nursing centers the same protections given to physicians in cases involving punitive damages. While punitive damages awards are infrequent, they can be astronomical. Without protections, providers and their insurers settle virtually all cases, rather than risk a runaway jury that could bankrupt their business.

According to a new national actuarial analysis on liability costs, published by AON, the liability cost per Medicaid day is $4.71. Given that Medicaid paid for about 19.2 million days of care in 2013, Medicaid spent nearly $91 million on liability related costs in 2013, much of this in contingency fees to out-of-state predatory lawyers. Most of the almost $91 million could have been used to improve the quality of care and the quality of life for nursing home residents.

Prior to the punitive damages protections enacted for physicians (MCARE, 2002), physicians had been facing large numbers of frivolous lawsuits and most cases were settled for fear of unpredictable jury verdicts on punitive damages. Many doctors felt blackmailed by lawyers into settlements, and many physicians were fleeing Pennsylvania. Once the limits on punitive damages (but not on compensatory damages) were enacted, lawyers stopped filing frivolous lawsuits, the number of suits fell dramatically, and physicians felt comfortable fighting cases and allowing them to be decided on the merits. The physician flight stopped almost overnight and insurance rates stabilized.

“These needless litigation costs divert already limited and much-needed dollars away from care,” said Stuart H. Shapiro, M.D., CEO of the Pennsylvania Health Care Association and Center for Assisted Living Management (PHCA/CALM). “The high legal costs paid by Pennsylvania health care providers, employers and governments inhibit job growth, increase health care costs and limit access to medical care.”

In early June, the Senate Banking and Insurance Committee approved a bill (S.B. 747) that would deter unscrupulous lawyers from trolling for dollars by extending the same protection to skilled nursing facilities, assisted living facilities and personal care homes that was extended to physicians in 2002. The measure now moves to the full Senate for consideration.

“These lawsuits have nothing to do with quality. In fact, these lawsuits actually contradict trends in quality as Pennsylvania’s nursing centers continue to exceed major milestones in quality,” Shapiro said. “And for skilled nursing facilities that face serious fiscal constraints, this issue is as much a budget matter as it is a judicial matter.”

According to a new national actuarial analysis on liability costs, published by AON, the liability cost per bed per day was $4.71 in Pennsylvania in 2013. Given that there are about 19.2 million days of care paid for by the commonwealth’s Medicaid program, almost $91 million was spent on liability related costs in Pennsylvania nursing homes in 2013. These $91 million should be spent on patient care rather than to line the pockets of out of state lawyers who often take 40 percent to 50 percent of settlements.

“Pennsylvania Newsmakers” is one of the state’s premier politics and public policy television talk shows. The show is available at www.phca.org and will air regionally:

  • WGAL Channel 8 (Harrisburg and Lancaster) Sunday, June 14 at 7:30 a.m.
  • Pennsylvania Cable Network, Sunday, June 14 at 4:30 PM
  • WBPH (Lehigh Valley and Philadelphia) Monday, June 15 at 8:30 p.m.
  • WKBS 47 (Altoona) Saturday, June 20 at 9:30 a.m.
  • WPCB 40 (Pittsburgh) Saturday, June 20 at 9:30 a.m.
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