MEDPAC Medicare Payment Report Recommends SNF Payment Reduction (SNF)
The Medicare Payment Advisory Commission (MedPac) is an independent congressional agency established by the Balanced Budget Act of 1997 to advise the Congress on issues affecting the Medicare program. MedPac is also charged with analyzing access to care, quality of care, and other issues impacting the Medicare program.
The goal of Medicare payment policy is to obtain good value for the program’s expenditures, which means maintaining beneficiaries’ access to high-quality services while encouraging efficient use of resources. Payment system incentives that promote the efficient delivery of care serve the interest of the taxpayers and beneficiaries who finance Medicare through their taxes and premiums.
MedPac Commission issues two reports in March and June each year to provide recommendations to Congress regarding payments for the various Medicare providers including skilled nursing facility services. In 2020, about 15,000 SNFs provided 1.7 million Medicare-covered stays to 1.2 million FFS (fee for service) beneficiaries or 3.3% of Medicare FFS beneficiaries. In 2020, Medicare FFS spending on SNF services was $28.1 billion.
In reviewing Medicare for SNF level of care MedPac looked at these primary areas: beneficiaries’ access to care; quality of care; providers’ access to capital; and Medicare payments and providers’ costs. MedPac concluded that overall SNFs’ did provide adequate access to care for beneficiaries, quality of care was difficult to evaluate due to the pandemic and that providers did have access to capital due to the increase in SNF transactions in 2021.
MedPac also concluded that Medicare payments were overstated showing an aggregate margin for freestanding SNFs at 16.5 percent. The reports states that the Medicare FFS payments are well above the cost of care in 2020. The report does not take into effect the impact of the pandemic and the decrease in occupancy from 85% to 74% in September 2021.
MedPac is recommending that for fiscal year 2023 Congress should reduce the SNF payments by 5 percent. The report states: “While the effects of the pandemic on beneficiaries and nursing home staff have been devastating, the combination of federal policies and the implementation of the new case-mix system (PDPM) resulted in improved financial performance for SNFS under Medicare. The high level of Medicare’s payments indicates that a reduction to payments is needed to more closely align aggregate payments to aggregate costs.”
AHCA is anticipating that the SNF Medicare payment rule released at the end of April will propose a decrease in the current payments. Will it be the full 5% for FY 2023? Or will Medicare spread the overpayment out over multiple years? AHCA will need all of our members to comment on this rule and is planning webinars to assist providers in making comments. Watch for updates from HCAM and AHCA as the end of April approaches.