Democratic House leadership announced this past Thursday that the proposed $850 billion economic stimulus plan includes a $90 billion shot in the arm to states by way of a temporary increase to the Federal Medical Assistance Percentage, as well as a few bundled programs, the most notable of which is $20 billion to hospitals and physicians to jump start EMR programs.  

Generally, the proposed stimulus package has come under not inconsiderable scrutiny because of a perceived lack of oversight in how the dollars will be spent.  However, many critics see this as a backlash from the complete lack of oversight when the first half of the so-called “financial system bail out” was delivered.  At any rate, the Medicaid component of the new stimulus plan is not immune to critics who wonder aloud whether the taxpayers will be getting the most bang for these billions of bucks.  

For example, McKnight’s reports that civil rights groups are particularly concerned about tying EMR adoption to these funds, without setting up a privacy assurance protocol/oversight committee.  What has not been mentioned is the connection between this money and the Deficit Reduction Act (discussed, obliquely, here) and whether the DRA programs may be a “shovel ready” protocol that could watch-dog the delivery of this money.


The Congressional Budget Office released a Budget Options Report for Health Care in December.  (available in PDF here).  Chapter 10 surveys long term care possibilities.  These reports give a snapshot of the budget picture for particular programs.  They are neither very detailed, nor particular helpful except inasmuch as the report can be used as a kind of cheat-sheet for government budgeting options.  In this regard, the scope of the Budget Options report is far-reaching and complete.  

One of the interesting arguments presented in the report (page 182) is that states may not have the infrastructure to support many of the proposed increases in home- and community-based services.  The legislatively directed shift away from providing care in nursing homes and to care delivery in the patient’s home may be a financial and logistical impossibility. 

The report goes on to examine the option of increasing the Federal Matching Rate for home and community based services (and paying for it with a decrease in the Federal Matching Rate for Nursing Home Services).  It concludes with a convincing argument that changes in the Federal Medical Assistance Percentage (FMAP) could actually have an adverse effect on care delivery, because it would incentivize states to transfer or divert residents to the Home/Community Based Service based solely on economic reasons — and not make that decision based on clinical necessity.  

I know many Administrators see the recent push to fund the “continuum of care” from Home/Community Based Services to Nurshing Home Services as a threat to their livlihoods.  And it may very well be, but that is a debate for a longer post than this.  But, it is encouraging to see the Congressional Budget Office take such a serious look at the logistics of proposed legislative solutions to long term care delivery problems.

An economic stimulus package that contained up to $37.8 billion in additional Medicaid funding for states has been shelved until January 2009.

Recently, two different versions of the plan were introduced in both the House and the U.S. Senate. The chambers could not reconcile their differences and the measure was shelved by committee until January.

In many important ways, of course, this is not news; that is to say, it is not unexpected. Medicaid funding has been pinched, scrimped and for-shortened over and over again for some time now. The money per-resident day is getting lower and the duration between payments (in most states) is getting longer. LTC facilities feel the choke more acutely, perhaps, because a majority of our residents (nationally) are Medicaid payer source only.

Reading this news today I cannot help but be reminded of the promise of the Deficit Reduction Act. This was a 2006 bill which, among many other things, gave Medicaid a much needed shot in the arm in return for greater Federal oversight on waste and fraud-abuse amongst Medicaid providers. Until the DRA, Medicaid oversight was primarily a state matter, though the majority of Medicaid dollars came from the Federal budget. The bill was sold as a win for all sides: increased revenues from the Federal coffer going to states, better, more efficient apparatus for investigation of abuse, and massive savings from eliminated waste.

With Medicaid payments coming in lower and longer, it begs the question: is the promise of the Deficit Reduction Act a failed one?

The answer is, of course, no.

Two essential items must be understood: 1) The DRA is a five (5) year program. We are in year two (2). The captured savings are necessarily cumulative and cyclic because of the oversight schedules CMS maintains (annual surveys and audits). This means that the DRA needs more time to work effectively. Here at the end of 2008, we have only really reaped the benefit of one and a half annual turn-arounds, not the full five. 2) Though waste and abuse are much more prevalent than is appropriate for the nation’s largest health care outlay, Medicaid is not upside down. Waste/abuse spending is not the majority of Medicaid spending. No Congressional finding has suggested that it is. Even if the DRA worked perfectly from moment one, Medicaid would still need additional funding to meet providers’ needs. The need of recipients simply outstrips Federal and State Medicaid budgets.

I anticipate the many original criticisms of the Deficit Reduction Act will be revived in the first months of the new Administration. (And perhaps rightly so – – this is not the post to argue the point) But, I hope LTC policy makers and industry thinkers do not get distracted by small bore issues; the last thing we need is to shelve needed additions to the budget because an enforcement program has not been allowed to work.