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Health-Care Providers May Get Increase In June, 130 residents of Jefferson Park Center, a nursing home in Charlottesville, Virginia, learned they had less than 90 days to move. Their families also learned that only 48 beds were available at other nursing homes in the area. The nursing home's owners blamed the closing on financial difficulties caused by the sudden, large reduction in Medicare benefits due to Congress passing the Balanced Budget Act of 1997 (BBA). Under the previous payment system, a patient who needed a high level of care, including intravenous drugs and physical therapy, would have been allocated about $500 per day. Under new rules, the amount was cut to $300. Nursing homes were not the only health-care providers affected by BBA spending cuts. Home health agencies, hospitals, and Health Maintenance Organizations (HMOs) are also reporting serious financial difficulties affecting senior access to services. The Congressional Budget Office originally estimated that the BBA would reduce projected Medicare spending by $112 billion over five years. Now it appears that the savings will exceed twice that amount, due to the cuts. Federal payments to home health care agencies have plummeted. Medicare spending on home health care dropped 45% in the last two years to $9.7 billion in 1999 from $17.5 billion in 1997. The nation's hospitals are struggling. About 60% of the hospitals in New Jersey for example, ended 1998 in the red. The figures, however, do not show how much the payment cuts have resulted in people going without treatment or how many patients have died. There is mounting evidence however, that nursing homes and home health agencies are avoiding sicker patients who require a high level care leaving the caregiving burdens to family members. President Clinton recently proposed increasing payments to Medicare health care providers by $21 billion over the next five years and Congress is likely to boost payments. Before the 1997 legislation, Medicare was going bankrupt. The 1998 Medicare Trustees Report showed that the program was in the red and projected deficits for the next 10 years. The BBA spending cuts, along with a crackdown on fraud, as well as increased revenues from strong employment changed that. This year the Medicare Trustees Report projects a surplus for the next ten years. A $22 billion surplus is projected for fiscal year 2000 alone. Sources: "Clinton Seeks More Medicare Spending," Alice Ann Love, Associated Press, June 20, 2000. "Jefferson Park Owners Gambling On Turnover", Brian Cohen, The Observer, June 7, 2000. "Medicare Spending For Care At Home Plunges By 45%," Robert Pear, The New York Times, April 20, 2000. "Hospital Margins Hit 20-Year Low," Healthcare Intelligence Network, April 6, 2000. This article first appeared in Volume 5, Issue 9 of "The Social Security and Medicare Advisor" newsletter (September/2000). To receive future editions of "The Advisor" in its special, free e-mail version, please click here. | ||||||||
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