WGA InsureBlog

The Center for Medicare & Medicaid Services recently ruled there will be a 2012 Medicare reimbursement reduction of approximately $4 billion (11.1%) on a year-over-year basis for skilled nursing facilities (SNF). There also is the potential of a “claw back” provision designed to seek reimbursement for certain payments made in the past year.

Not-for-profit skilled nursing facilities generally manage with a thin margin; typically in the 3 – 5% range. The planned Medicare reduction coupled with generally recognized underpayments from Medicaid may damage an already challenged business segment – a clear threat to the skilled nursing facility sector – the second largest healthcare facility employer country-wide.

This reduction may force skilled nursing facilities to make tough decisions about continued employment and patient levels and in the worst case scenario continued viability. The trickle down effect is staggering. If a facility receives less from the public payers, they likely will seek higher reimbursement from the private payers. There will be those who elect to discharge family members from SNF facilities and resort to home care. Higher fees may also speed up other patients’ asset depletion and accelerate their transition to Medicaid status. We are at a critical tipping point where jobs in this sector are critical and patient needs must be considered. More on this as events unfold.

About the Author

Rick Black is a Senior Vice President at WGA, with a focus on Property and Casualty Insurance.  He joined WGA in 2007, bringing with him 30 years of insurance experience in all areas of complex risk and risk financing.  Mr. Black is a co-leader of WGA’s Connecticut operation.

617.646.0279   Rick.Black@wgains.com Connect with Rick on LinkedIn