MedPAC Official Presses Congress to Freeze SNF Payment Rates Through ’19

Reiterating its oft-repeated stance, the Medicare Payment Advisory Commission (MedPAC) once again asked Congress to put a hold on Medicare payment rates for skilled nursing facilities through the end of 2019, with an additional request for a full review in 2020.

In remarks before the House Ways and Means Committee on May 18, MedPAC Executive Director Mark Miller claimed that the current payment rate for SNFs is sufficient, citing stable participation in Medicare and high margins.

“The vast majority of beneficiaries — 88% — live in a county with three ore more SNF options; less than 1% of beneficiaries live in a county without a SNF option,” Miller said, adding that 2015 marked the 16th consecutive year in which SNFs logged an average Medicare margin of 10% or more, at 12.6%.

Miller claimed that the high margins mean SNFs have added room for cost savings, particularly in the area of therapy services: In MedPAC’s view, he said, the existing payment structure incentivizes SNFs to offer “therapy services of questionable value” while neglecting drugs and other “ancillary services.”

“In 2020, the Secretary should evaluate the need to make further adjustments to payments to bring them into better alignment with costs,” Miller said.

Such a refrain should be no surprise to operators in the SNF space: MedPAC has advocated for either freezes or reductions to the SNF payment rate since 2008 along with significant restructuring, though Congress has routinely ignored the commission’s suggestions; the House and Senate are under no obligation to heed MedPAC’s guidelines.

MedPAC claims that had lawmakers listened and implemented its rebalanced payment suggestions, facilities that rely less on therapy programs — as well as nonprofits — would have seen their payments increase while saving the government billions.

“The Commission has been frustrated by the delay in lowering the level of payments and revising the system,” Miller said.

Back in April, MedPAC voted to recommend that Congress implement an entirely new post-acute care prospective payment system (PPS) by 2021; the PPS overhaul previously wasn’t expected until 2023 or 2024.

The Centers for Medicare and Medicaid Services also recently floated a similar restructuring plan that would address some of MedPAC’s concerns, including the incentive for SNFs to offer higher-reimbursement therapy services. Under CMS’s proposed plan, SNFs would still receive the same total Medicare dollars, but the allocations would shift, with for-profits seeing a 1.1% decline in reimbursements and non-profits enjoying a 3.1% boost.

In response to a question from Rep. Lynn Jenkins, a Kansas Republican, about how reimbursement overhauls would affect non-profit and for-profit providers differently, Miller said that the change in reimbursement levels was a consequence, not the the intention, of the proposals.

“That just happens because the way the payments shift, based on the patients that those two different types of providers take,” Miller said.

The CMS plan remains in its very early stages, though just its announcement in an Advance Notice of Proposed Rulemaking in late April was enough to spook investors in publicly traded skilled nursing providers and related REITs, whose stocks skidded on the news.

Written by Alex Spanko

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Alex Spanko
Assistant Editor at Aging Media Network
Alex covers the skilled nursing and reverse mortgage industries for Aging Media. Outside of work, he reads nonfiction, yells at Mets games from his couch, and enjoys pretty much any type of whiskey or scotch — often all at once.

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