On June 12, the U.S. Department of Housing and Urban Development (HUD) issued Notice H 2012-11 State Registered Lifetime Sex Offenders in Federally Assisted Housing, which reiterates statutory- and regulatory-based responsibilities to prohibit admission to federally assisted housing for individuals subject to a lifetime registration requirement under a state sex offender registration program, and supersedes Notice H 2009-11. This will require changes in screening and recertification practices.
Larry Zook, president and CEO of Landis Homes, a LeadingAge member in Pennsylvania, talks about why aging-services providers should be using social media platforms such as Facebook and Twitter.
The tides of changes are rolling in for the skilled nursing industry, and perhaps none is more aware of what is to come than Daniel Mendelson, the CEO and founder of Avalere Health, a business strategy and public policy firm focused on the nation’s healthcare problems.
Senior Housing News recently got a chance to pick Mendelson’s brain about how the industry has handled Medicare cuts and its ability to sustain more under the sequestration; why the long-term, majority-Medicaid census nursing homes will get squeezed out business, and his pick for president—kind of.
Senior Housing News: You led a session at the NIC conference in March giving your perspective on where the industry is going in light of health care reform/federal initiatives. In a nutshell, what was the session’s most important takeaway for those in the skilled nursing industry?
Dan Mendelson: The most important takeaway is that post-acute care providers need to start operating in a way that is consistent with a care-managed environment. They need to understand care management. The paradigm shift is moving from a “silo” system in which a nursing home gets paid to deliver nursing home care, to a more competitive environment in which the nursing home is a cost-reduction tool for a health plan, for an ACO, or even a hospital that is trying to avoid cost. That is the fundamental takeaway.
SHN: Can you talk about the current political scene in terms of the nation’s deficit crisis? Are cuts an inevitable part of health care policy?
DM: We are in a deficit reduction environment in which all providers are targets for payment reductions. That’s going to continue, and it has been the case for some time. The sequestration policy is one example of that. After the election, there will be a broader discussion of deficit reduction whether it’s by a Republican or Democratic president.
SHN: I’ve heard that it might actually be better for the industry if the sequestration does go into effect, because at least the industry will know it’s getting 2% cuts, rather than facing an unknown cut. What are your thoughts on that perspective?
DM: My view is, postponing cuts is good, and taking cuts is bad. Any cut that you can push off into the future, you should do it. It gives you more time to adjust. If the sequestration happens, it’s not going to be the last cut.
It’s always a question of, [A cut] relative to what? There have been some proposals to deficit reduction that have been more intensively focused on nursing homes. The good part about sequestration is that it levels the playing field between nursing homes and hospitals.
If sequestration is pushed off or mitigated, it would be better for the industry.
SHN: What would mitigation look like?
DM: Either Congress decides to do less than what was originally planned, or decides to postpone sequestration beyond when it’s scheduled to start now. These are policies that in this environment are likely– hospitals and nursing homes are pushing hard to mitigate the payment reductions.
SHN: Would it be better for the industry to get a Democrat or a Republican in office?
DM: There are advantages and disadvantages in either direction. The advantages of a Democratic administration is that it’s generally very well aligned with beneficiary interests. Anything that entails more payments out-of-pocket for a beneficiary is something the administration is going to push back on.
The Democrats will talk about deficit reduction, but when push comes to shove they are less likely to adopt policies that really push down on costs. The positive side of a Republican administration is it’s generally a less regulatory regime; it’s generally a regime that values the private sector.
There’s a flip on both sides. It’s incumbent on any provider of post-acute care to work the positives once the election is over.
SHN: Even though there was a lot of uproar after the average 11.1% cuts were announced, it looks like the industry, overall, has managed to mitigate the cuts and keep going. But there are some companies whose first quarter earnings reports weren’t so great, and if reimbursements keep getting cut, do you think the industry can sustainably mitigate the effects and still turn a profit?
DM: No. What’s happening now, is, historically, Medicare subsidized Medicaid extensively. Now, Medicare reimbursements are going down, and it gets harder and harder for the post-acute care providers to run without subsidies.
At the same time, Medicaid payments are going down in many states; many are trying to pay less. Providers are getting squeezed from both sides: Medicare and Medicaid. A number of Avalere studies show that providers are having to reduce the size of their staff and are incurring some sizable losses in operation costs. That will happen increasingly if these trends continue.
SHN: Will the skilled nursing industry end up as short-term nursing/rehab/will long-term nursing home care remain relevant? How would that be affected by hospital readmission penalizations?
DM: Nursing homes are relevant and will remain relevant as a cost-effective substitute for clinical care, and a cost-effective setting in which to do intensive rehabilitation.
The very-long stay nursing homes, that are primarily Medicaid-dependent, are going to be squeezed out of business, because they won’t have any subsidy. A more intensive style of nursing home care will emerge [and will be] enduring, because it’s a cost effective way to provide transitional care.
Nursing homes can be a very integral part of the care transition from hospital to home and to prevent hospitalization. If they reframe the value proposition that way, they will be more attractive. Going forward, it’s going to be the nursing home’s ability to play as a partner to a health system in providing effective health care.
On hospital readmissions: A well-run nursing home can reduce hospital readmissions. Increasingly, nursing homes will need to frame their value proposition around effectively reducing readmission and improving quality for hospitals.
The healthcare system is increasingly oriented toward quality. The entire post-acute sector needs to understand that payors prefer to pay on the basis of quality. To the extent that quality is being improved in nursing homes, that becomes a dominant selling proposition for these facilities.
SHN: Some policy proposals favor more “block grants” for Medicaid funding to the states. Is this a viable plan or not?
DM: The whole discussion of block grants suffers from a lack of specificity. The issue is that the federal government won’t completely abdicate its responsibility in the Medicaid space. It can’t just say, ‘Here’s the money, goodbye.’ The question becomes, how is the money being monitored, tracked, and specified? If you just give money to the state, and you don’t require anything of them, that’s a real problem for providers.
But if you give money to states and hold them accountable for quality, that’s not necessarily a bad thing for nursing homes and the post-acute sector. The devil’s in the details, and you’ve gotta look closely at these proposal.s
SHN: Considering the Medicare Payment Advisory Commission’s most recent report to Congress which discussed Medicare payment margins, will skilled nursing end up being a “break-even” industry?
DM: The problem with MedPAC is it doesn’t care about Medicaid. It’s the Medicare advisory commission. They have the luxury of being able to say, ‘Well, Medicare overpays,’ without acknowledging that Medicaid underpays.
A more appropriate way of looking at the situation is holistically, at both the federal and state government systems: Do they or do they not cover the cost of care that’s being given? As Medicare rates go down, we’re approaching territory where aggregate federal payments are going to be less than costs, and that’s unsustainable.
SHN: Where do you see the government pushing the health care industry?
DM: The reform covers 30 million people, it moves toward quality-based programs, and it favors care management systems. Those are the three fundamental things the system does; it pays for itself by reducing provider payments. That’s been the primary thrust of this administration.
The part of that most relevant to the post-acute care industry is the idea that care transitions and integration are more important.
If there’s a political change in the upcoming election, things will change fundamentally and you’ll have more of an emphasis on patient responsibility, deployment of managed care for dual eligibles, other policies generally favored to the Republican party.
On home health care: There’s been a dramatic expansion of home health services over the past 10 years, and I do expect that to continue. Much of that is critical for keeping patients out of more intensive care settings.
On assisted living: Assisted living can be a useful part of care management and transition. A number of large AL providers have approached us trying to define their place in the integrated system. They’re going to need to prove their value; they can’t just assert it. A lot of analytics will need to be done in order to test the value proposition that assisted living is meaningful.
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Senior cooperative housing complexes are a growing trend in the Midwest as a way for older adults to live independently in a community setting, reports USA Today.
In this model, co-op members collectively own the complex and can still take advantage of tax and financial benefits for homeowners along with maintaining control over decision-making—aspects that aren’t always present in other types of senior living communities.
The first senior cooperative was developed in 1978 in Edina, Minn. Over the past 30 years, it’s remained largely a Midwestern phenomenon. Of the roughly 102 senior cooperatives nationwide, almost 90 are in Minnesota and Iowa, mainly due to local developers and financial lenders who have embraced the concept, said Dennis Johnson, board chairman of the Senior Cooperative Foundation in St. Paul, Minn.
But with the anticipated wave of baby boomers reaching retirement age, cooperatives could offer an alternative housing choice for seniors seeking independent, maintenance-free living and social interaction, said Keith Jans, president of Real Estate Equities Development based in St. Paul.
“I think there’s great potential for where this can go,” Jans said.
Brian Carey, senior vice president of development, said he believes the cooperative model will see a lot of growth in the future. “It’s really the Baby Boomers who are fueling the demand for this type of housing,” he said.
Cooperatives offer financial advantages, since residents can deduct their mortgage interest and real estate taxes just like single-family homeowners, Carey said. Also, in a limited-equity cooperative, the value of a membership increases by a preset amount for every year they remain in the building, Johnson said.
One disadvantage to the cooperative model is that family members must continue paying the complex’s monthly fee even if someone moves out or passes away until the membership is sold, says the article. The slow housing market can make that difficult, but even despite the real estate market crash, senior cooperatives have been able to maintain their value fairly well.
Read the full USA Today article.
Written by Alyssa Gerace
The Financial Accounting Standards Board decided during its May 30 meeting to finalize some amendments changing the way continuing care retirement communities (CCRCs) account for refundable entrance fees.
The amendments will be included in a separate Accounting Standards Update in July 2012, and they could affect certain communities depending on their entrance fee refund policies.
“CCRCs that do not have language in their contract that specifically limits refunds to the reoccupancy proceeds of the specific unit, will have a cumulative effect adjustment—which is a change in accounting principle,” says Cline Comer, a health care partner with accounting firm CliftonLarsonAllen. “This will restore the liability to the full refundable amount under the contract, with a corresponding reduction of net assets.”
Affected communities will need to figure out how much they’ll be impacted by this accounting change, says CliftonLarsonAllen, and they might need to devise a plan to communicate with their residents and consumers as some may no longer recognize an “amortization income.” This could result in operating losses in financials, says the firm.
Read more at CliftonLarsonAllen.
Written by Alyssa Gerace
The federal government’s new Consumer Financial Protection Bureau today announced the launch of an effort toward the protection of older Americans from fraudulent financial practices. Looking closely into the work of those who deem themselves “senior experts,” the agency said it will examine of professionals with special designations that separate them as advisors for seniors.
Citing $2.9 billion lost to the “silent crime” of financial exploitation of older Americans, CFPB Director Richard Cordray outlined a public inquiry and new efforts the bureau will take toward preventing of elder financial fraud.
“Our initiative will evaluate how financial advisors obtain certifications that designate them as the best advisors for older Americans,” Cordray said. “We want to know where these designations are coming from and whether or not older Americans and their families can easily find out which designations are legitimate.”
The effort will work with the Bureau’s Office of Older Americans, led by Skip Humphrey, to find the most common forms of senior financial fraud as well as the types of financial education that are available toward prevention. The outcome will inform future policy decisions, Cordray said.
“We want to know what is working and what is not, so that we can fix what is not working,” he said. “Older Americans need to be able to take comfort in the fact that their financial advisor is actually looking out for their best interests. Right now, we know that too often the opposite is the case – some of these people call themselves “experts” in senior finances after having received only a few hours of inadequate training.”
Read more about the bureau’s effort on its blog.
Written by Elizabeth Ecker
Senior Living Investment Brokerage, Inc. recently facilitated the sale of an 86-bed skilled nursing and assisted living facility located in Rose Hill, Kans. for $4.25 million, or about $55,900 per bed.
Rose Hill is a one-story, approximately 33,000-square-foot facility that sits on 5.5 acres of land. The skilled nursing section has 56 beds and was built in 1971, while the assisted living section has 30 beds in 20 units, and was built in 1978. It underwent renovations between 2001 and 2002.
The facility’s seller is a local independent owner/operator looking to retire from the long-term care industry, and sold Rose Hill to a regional owner/operator based in the Dallas-Forth Worth, Tex. area.
At time of sale the facility’s occupancy was approximately 94%.
Nick Cacciabando, Matthew Alley, and Jeff Binder of Senior Living Investment Brokerage handled the transaction.
Written by Alyssa Gerace
