HHS Proposes New Payment System for Skilled Nursing Providers

The new proposed Department of Health and Human Services (HHS) budget was released on Monday, and it’s a mixed bag for skilled nursing providers.

President Trump’s spending blueprint would make changes to Medicaid by creating a “market-based health-care grant” that could fund programs in addition to the traditional Medicaid program — a change that would lower Medicaid spending by about $250 billion over 10 years, according to the Washington Post.

HHS also plans to address payments for post-acute care providers by establishing a unified payment system based on the needs of patients, rather than where they receive care, starting in fiscal year 2024.


“The first year of implementation is required to be budget-neutral relative to estimated payments that would otherwise have been paid in FY 2024 absent this change,” the HHS said in a budget brief published Monday.

Payment rates under the new system would be set prospectively on an annual basis with episode grouping and pricing based on the average cost for providing post-acute care services for a diagnosis. The changes are expected to save $80.2 billion over the next decade, according to HHS.

For fiscal 2019 to 2023, all primary post-acute care settings — including skilled nursing facilities, home health agencies, inpatient rehabilitation facilities, and long-term care hospitals — will receive a lower annual Medicare payment update. However, exactly how much lower wasn’t clear as of press time.


Overall, the changes aren’t seen as positive for the skilled nursing industry according to major trade groups.

“While the document’s language suggests support to Medicaid and Medicare, details to back up that claim are lacking,” LeadingAge CEO Katie Smith Sloan, CEO said in a statement to SNN. “What we do know: The budget proposes Medicaid per capita caps and block grants, which LeadingAge continues to oppose. It also proposes cuts to Medicare, which can have negative consequences for beneficiaries and providers and threaten important community supports funded under the Older Americans Act.”

One aspect of the budget that could be welcome news to providers is the plan to lower the frequency of surveys for top performing skilled nursing communities.

“[The] proposal gives the Secretary authority to adjust statutorily required survey frequencies for top-performing skilled nursing facilities and reinvest resources to strengthen oversight and quality improvement for poor performing facilities.” said HHS in the budget brief

However, the the proposed measure has no impact on overall spending in the budget.

The Trump administration’s budget blueprint merely serves as a guideline, with no actual legal force; the New York Times observed that the plan “has little to no chance of being enacted as written.” Congressional Republicans had attempted to institute per-capita Medicaid caps as part of comprehensive Affordable Care Act repeal efforts last summer, but were thwarted by a handful of GOP lawmakers who objected to the plan.

Written by John Yedinak

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