Looming Medicare Cuts Threaten Physician Services in Nursing Homes, Even as COVID Continues

The COVID-19 pandemic has reinforced the need for high-level clinicians in nursing facilities, but a pending change to Medicare reimbursements could force physicians to take a steep pay cut in order to continue to practicing in post-acute and long-term care — or push them further and further out of the space.

The Medicare Physician Fee Schedule for the calendar year 2021, released in August by the Centers for Medicare & Medicaid Services (CMS), proposes a range of reductions in reimbursement for various services covered under Medicare Part B.

Therapists could see significant cuts to their reimbursement if the moves take effect next year — as could physicians who provide services in nursing homes and assisted living facilities, even as nursing homes are pummeled by the effects of the COVID-19 pandemic.


Therapy services, physician services, and diagnostics — to name just a few — are covered by Medicare Part B for residents in both nursing homes and assisted living facilities.

Generally overshadowed by the Medicare Part A benefit that primarily covers post-acute care, the program does not pay for room and board for the nursing home patient, Cynthia Morton, the executive vice president for the National Association for the Support of Long-Term Care (NASL), told Skilled Nursing News on September 22.

But Part B does pay for services for both short-term patients whose stay is covered by Medicare Part A and long-stay, “custodial” patients, covered by cash, private insurance, or Medicaid.


The cuts for therapists stem from an effort to maintain budget neutrality for the physician fee schedule, meaning CMS cannot spend more than a given amount on services paid under the schedule per year.

The 2021 fee schedule contains cuts ranging from 8% to 10% to the “SNF family of CPT [current procedural terminology] codes,” stemming from “a decrease in the conversion factor that is part of the formula that determines reimbursement for the codes,” according to an August 13 release from AMDA – The Society for Post-Acute and Long-Term Care Medicine.

That cut is intended to offset “the 2020 rule’s increase in pay for evaluation and management (E&M) office visits starting in 2021,” according to the group.

A different statement, from the American Physical Therapy Association (APTA), the American Occupational Therapy Association (AOTA), and the American Speech-Language-Hearing Association (ASHA), characterized it as a cut to offset increases in payments to primary care physicians.

But the nursing facility services codes in the affected CPT codes already have some of the lowest reimbursements for primary care, Alex *Bardakh, the director of public policy and advocacy at AMDA, told SNN on September 28. Lowering them by that 8% 10% range is going to force hard choices for physicians providing services in the SNF or assisted living setting.

There are essentially two different kinds of practices, Bardakh said. One exclusively focuses on providing physician services to patients in the SNF setting, and such cuts — especially as services are affected by COVID-19 restrictions — make it challenging to sustain a practice with such a focus.

The other type of practice has a both a brick-and-mortar office and sees patients in the SNF setting; for those physician providers, the cuts could mean choosing between one setting or the other.

“Given that the office codes are being increased significantly, and the nursing facility [codes are] being decreased, the gap between the two now grows,” Bardakh said. “Naturally, I think people will have to make a decision: Do they do more visits in the office where the payment is now significantly higher than in a skilled nursing facility? Or do they increase their patient panel and have to end up seeing a lot more patients, which also isn’t ideal, to make up the difference?”

The result of this dynamic could well be that physicians are less likely to want to take on nursing home patients, given that it’s logically easier to gravitate to higher-paid settings, Morton argued.

The only way the cuts could likely be averted at this point would be through an act of Congress, because CMS is required to “to work under budget neutrality with the fee schedule,” Morton told SNN. The agency could, in theory, delay the cuts in the schedule — which would affect 36 medical specialities — in light of the public health emergency from COVID-19, but NASL has not seen any signs that it will do so, she said.

“The budget neutrality is the underlying reason why we’re seeing these dramatic offsetting cuts in 36 specialties,” Morton told SNN. “So Congress could pass a law that says: In some way CMS, you can disregard budget neutrality. Either that or exempt it or find some way around it. Congress can do that. What’s not entirely clear is if Congress were to do that … would it cost money and how much money, if Congress were tell CMS: Don’t do something that it really intends to do?”

Different companies and initiatives have tried to focus on expanding or enhancing the role of physicians in the SNF setting, with one of the more recent examples being North Shore Healthcare’s partnership with the physician-led GAPS Health to focus on bolstering the role of the medical director.

But if the reimbursement for those services drops drastically, the effect could be chilling to those efforts, especially during a pandemic.

“There’s a definitely optics problem,” Bardakh said. “Certainly it wouldn’t be a good policy at any time, but it just doesn’t even compute at a time like this.”

*An earlier version of this article misspelled Alex Bardakh’s last name. SNN regrets the error.

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