Post Election: All Eyes on Washington

Medicare cuts will be harmful to residents and providers, according to a new ad campaign unveiled this week by the American Health Care Association (AHCA).  Launched on Monday, AHCA’s week-long ad blitz brings the sector’s concerns with possible Medicare funding cuts directly to the nation's lawmakers.

The campaign, sparked by a looming Medicare sequester which is slated to slash Medicare payments to providers by two percent, features Beverly McKinney, who was hit by a car and discharged from a hospital soon after breaking her pelvis. The ad focuses on McKinney's experiences, rehab and recovery and will utilize media outlets and publications in Washington, D.C. as well as MSNBC, CNN and FOX News.  Sequestration is the procedure in which deep, automatic spending cuts will be triggered if members of Congress cannot agree on how to cut the federal deficit. The Obama administration estimates that the sequester would slash $11 billion from Medicare as a result of the across-the-board two percent provider cut.

“We're running these ads to remind policymakers that cuts have consequences, and potentially jeopardize the tens of thousands of residents we care for every day,” indicated Mark Parkinson, AHCA President and CEO.  He added that any fiscal cliff compromise that lawmakers reach needs to “consider the impact on our residents and the much-needed access to quality care that we provide.”

Closer to home, Governor Bob McDonnell has called for another round of belt-tightening, instructing state agency heads to ready plans to cut four percent from their budgets as a contingency against future economic tremors.

In a memo distributed late last week from the Governor’s Chief of Staff, Martin Kent stated that "In the face of this uncertainty, it is our constitutional responsibility to prepare for the associated risk".  The memo also cites concerns about rising health care costs, namely from Medicaid, and notes that the revenue surplus Virginia ended the last fiscal year with is already spoken for.  It directs agency heads to prepare proposals by November 21.

Kent added that what's unique this time is the "unprecedented uncertainty presented by the looming federal fiscal cliff, and additional budget pressures currently facing Virginia." A recent study says defense-heavy Virginia ranks second only to California in estimated job losses from the potential budget reductions stemming from sequestration.  In addition to deep Medicare cuts, $500 billion in defense spending will be withheld beginning in January.  

For nursing facilities serving Medicaid beneficiaries, additional funding of $40.0 million ($20.0 million General Funds) is scheduled to be paid in the form of enhanced payment rates beginning July 1, 2013, the start of State Fiscal Year 2014.  While we have no specific reason to be concerned that this new funding is in jeopardy, given the focus on future Medicaid spending, it is critical that we continue to advocate for the need for adequate Medicaid payment with both the McDonnell administration and members of the General Assembly.

As evidence of the current volatile economic climate, Governor McDonnell announced today that total general fund revenue collections rose by 15.7 percent in October, primarily due to growth in individual withholding, nonwithholding and corporate income tax payments. On a year-to-date basis, total revenue collections rose 4.8 percent through October, ahead of the annual forecast of 2.9 percent growth.

Virginia's two-year state budget will be reviewed and likely modified by the General Assembly when it reconvenes in January.