CMS Boosts Medicare Advantage Rates by 2.5% in 2020, But Trickle-Down to SNFs Unlikely

The Centers for Medicare & Medicaid Services (CMS) this week announced a 2.5% boost to overall Medicare Advantage payment rates — but the news isn’t likely to bring relief to skilled nursing operators struggling with low MA reimbursements.

That 2.5% rate gain in 2020 represents a bigger gain than the 1.59% increase that the agency previewed in its advance notices about the change, with a particular focus on certain home- and community-based benefits.

For instance, starting at the beginning of the next calendar year, MA plans will be able to cover a whole host of ancillary services for enrollees with chronic illnesses. This could include non-medical transportation, expanded meal services, and home upgrades “if these benefits have a reasonable expectation of improving or maintaining the health or overall function of the patient.”

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CMS had initially been conservative in its assessment of the types of home improvements that could potentially fall under MA coverage, but the final directive lists a variety of capital improvements that seniors with chronic illness will soon be able to pay for with their health insurance plans — including the installation of permanent ramps, the widening of hallways, or carpet shampooing services for adults with asthma.

“The final updates will continue to maximize competition among Medicare Advantage and Part D plans, as well as include important actions to address the nation’s opioid crisis,” CMS wrote in its announcement.

One area that will likely not see improvement is skilled nursing payments. Medicare Advantage plans typically use these rate increases to expand the kind of ancillary services that make them attractive options to seniors in the first place, according to long-term care consultant and researcher Anne Tumlinson — while also setting them apart from other rivals in the space.

“The competition is intense in the MA market, and these higher rates have to go directly into the ‘benefit’ costs that are most likely to attract the most enrollees,” Tumlinson, founder of Anne Tumlinson Innovations, told SNN via e-mail.

MA plans have seen substantial growth in recent years in large part due to the attractive benefits they bring to younger seniors, filling gaps in prescription drug coverage and providing protection in the case of catastrophic costs.

“If you go into the marketplace and you try to buy a Medicare Advantage plan, you’ll see they’re offering deals: You can get the traditional Medicare package plus some dental, plus something else, and it’s going to cost you less than if you stayed in traditional fee-for-service,” Tumlinson told SNN on a recent episode of the “Rethink” podcast.

That makes the rate increase news cold comfort for SNF operators, who are increasingly struggling with the lower daily rates that Medicare Advantage plans pay. For instance, the average national MA reimbursement was $430 per patient day in the fourth quarter of 2018, according to the National Investment Center for Seniors Housing & Care (NIC), as compared to $521 for traditional Medicare.

“I would be surprised [if] the rate bump would trickle down to SNFs,” Tumlinson said.

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