Medicare Cuts for Senior Living: What It Means For Your Loved Ones

Each year, senior living facilities that rely on Medicare and Medicaid have breathed a sigh of relief. A couple decades ago there was supposed to be a cut on reimbursements for physicians. And each year, Congressed allowed it to build up.

The 'Doc Fix' and the Larger Problem

But that's no longer the case for the so-called "doc fix" which has now increased to 27 percent of the total reimbursement rate. To compensate, Kaiser Health News reports that nursing homes are trying to eliminate cuts in their own rates by limiting the re-admission rate after 30 days.

The reason is that for a number of patients, skilled nursing facilities or nursing homes should only be used as temporary way stations after slips and falls or severe illnesses. A large number of patients should only require rehabilitation, and nursing homes argue that if they can cut their rates, it would end up saving $2 billion over the next seven years.

What they're hoping for, at least in terms of Medicare, is to offset the effect of an 11 percent reduction that came into effect in October 2011. But these cuts, along with those from states that help Medicaid pay for care for less affluent seniors, are putting a real crimp on plans for many facilities.

The first step is the legislative process, lobbying for alternatives like cutting readmission rates that will help save money without actually affecting care. But another trend could affect seniors and those looking for senior care options.

Staffing Cuts, Changes and Buyouts

Many assisted living facilities and nursing homes are merging operations, or being bought out by larger operators like Sunrise Assisted Living. By minimizing the overhead of office staff (think accountants and business managers), cost savings can reduce the impact of government assistance cuts.

If you've decided on a smaller home or facility for a loved one, keep in mind that this merging and buyout period is still continuing. So a purchase could affect the staffing if the new company brings in additional staff members, or ones that have been trained under that corporate philosophy.

The other concern to watch for is reduced staffing levels. Many homes offer staffing levels (the ratio of aides to residents) that are above state requirements. But these could be cut if rates continue to go down for reimbursements. If you're concerned, be sure to talk with loved ones about their level of care.