Energy - February 28, 2014

Medicare underfunding catching up to skilled nursing facilities

Two independent reports on the financial instability of Pennsylvania’s skilled nursing facilities reveals the insecurity of future care for some of the Commonwealth’s most vulnerable citizens.  Stuart H. Shapiro, M.D., President and CEO of the Pennsylvania Health Care Association (PHCA), revealed the startling figures and recommended action to state legislators at a press conference at the state capitol on February 21st.

The studies revealed that profit margins for Pennsylvania’s skilled nursing facilities have decreased by 63 percent between 2007 and 2013 from 3.2 percent to 1.2 percent.  This margin shortfall is tied directly to the amount of Medicaid recipients in the facility.  The profit margin for facilities with 75 percent Medicaid occupancy dipped to 0.3 percent in 2012.

Skilled nursing facilities in Pennsylvania have an average of 65% Medicaid occupancy and are significantly underfunded compared to other health care industries. “Pennsylvania reimburses nursing facilities $26 a day less per resident than the true cost of care,” reported the PHCA/CALM, a statewide advocacy organization for older residents and their care providers.  “That shortfall has more than doubled since 2007, when it totaled $13.23 per resident per day.  Unreimbursed Medicaid costs in Pennsylvania will exceed $470 million this fiscal year.”

Dr. Shapiro has asked legislators to make funding of Medicaid a priority during the on-going budget discussions.  Shapiro is asking the legislature for an additional $16 million would go to nursing facilities that care for a higher concentration of Medicaid recipients. 

To access both studies visit


Forecast for municipal pension fund troublesome

Pennsylvania’s Auditor General Eugene DePasquale urged state legislators and the Corbett administration for municipal pension relief.  The Attorney General’s remarks came at a press conference Wednesday alongside Pittsburg Mayor Bill Peduto. Both DePasquale and Peduto called on state officials to address this challenge.  “This is a Pennsylvania-wide problem, not a Pittsburgh or Philadelphia problem, and it is not going away. We are talking about nearly a $7 billion unfunded liability which impacts small townships, mid-sized boroughs and big cities throughout our state,” said DePasquale. 

According to the Pittsburg Post-Tribune, DePasquale released a report that found the Commonwealth’s 573 distressed pension funds to be $6.7 billion short of being fully funded. Mayor Peduto stated, “Like a leaky roof, the longer we wait to tackle this issue, the bigger it'll become.”  The Tribune also reported that changes to the way unfunded liabilities are accounted for, set to take place in 2015, will make it more expensive for communities to borrow money.DePasquale warned that this issue will become problematic for taxpayers if nothing is done to address it.  The extent of the debt in some municipalities is so severe that some beneficiaries are at risk of losing some of what they were promised.  If payments are missed, the burden for the shortfall is shifted to the taxpayers. “This liability can truly become every taxpayer’s nightmare,” said DePasquale.

DePasquale and Peduto called for additional aid for distressed pension funds and combining the administration of the funds in an effort to reduce overhead costs.  They also advocated for stipulation would prevent employees from inflating their retirement pay with excessive overtime towards end of their careers.