Nursing homes and continuing care retirement communities (CCRCs) will ultimately experience an increase in expenditures from $174.2 billion in 2019 to $273 billion in 2030 – a fluctuation along that timeline reflects a drop in federal financial support and eventual moderation compared to what the industry received during the height of the pandemic in 2020.
Average annual spending growth for nursing homes and CCRCs increased from 3.9% in 2019 to 13% in 2020, only to drop down to -7.7% in 2021. From 2022 to 2030, that statistic will increase slightly from 3.6% to 5.2% before decreasing again to settle at 4.6%.
That’s according to the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS), which published its annual spending analysis in Health Affairs on Monday.
“Our expectation is that other federal programs and public health activity begin to normalize and decline from these all time highs that were reached in 2020,” said John Poisal, deputy director of the National Health Statistics Group, Office of the Actuary at CMS. “As we move toward 2025, we do really transition back to the traditional drivers of health spending, we get back to economic, demographic and health-specific factors.”
The analysis also found that once the public health emergency (PHE) is no longer in place, spending and enrollment among skilled nursing facilities will be affected; Medicare’s three-day-stay waiver and exceptions made for home care are all set to end along with the PHE.
Potential expiration of the three-day-stay waiver, for one, will contribute to slower Medicare nursing home spending growth this year, the study found. The initial rule change was made by CMS at the beginning of the pandemic in order to allow hospitals to reserve beds for severely ill patients, discharging those who could recover at a SNF.
Prior to the pandemic, a patient needed to have a three-day inpatient hospital stay before Medicare would cover the SNF stay that followed. A bill to make the waiver permanent was introduced in June of last year but hasn’t gained traction since.
Slowed growth into 2023 reflects less “use and intensity of services,” study authors said. Despite a slowdown connected to the PHE, Medicare spending is still projected to exceed $1 trillion in 2023, the study found.
Interestingly, Medicaid nursing home spending growth is expected to increase “sharply,” as those receiving home care move to an institutional setting when the PHE ends.
This is coupled with some Medicaid beneficiaries who may no longer qualify for benefits under the program – the PHE temporarily suspended Medicaid redeterminations, which always trigger a high risk of coverage losses among eligible people due to paperwork barriers, according to a September article published by The Commonwealth Fund.
In 2023, overall Medicaid enrollment is expected to drop significantly by 2.6 million, or 3.2%, as states “proactively trim their enrollments,” study authors said, making the nursing home increase an outlier.
Total Medicaid spending is expected to exceed $1 trillion by 2028, according to the study.
Overall Medicare spending jumped to $923 billion in 2021, up 11.3% from $829.5 billion in 2020. Medicaid spending also experienced a 10.4% increase year over year, from $671.2 billion to $740.8 billion.
Spending for other federal programs and public health activity is expected to have declined from $417.6 billion in 2020 to $286.8 billion in 2030, according to the analysis.
Aging service trade organizations like the American Health Care Association (AHCA) have asked the U.S. Health and Human Services (HHS) Secretary Xavier Becerra to extend the PHE, with the BA.2 variant bringing the threat of a Covid resurgence in the country.
BA.2, or the “stealth” omicron variant, is more transmissible than the original version omicron but not as severe, reports say.
“This pandemic is far from over,” AHCA President and CEO Mark Parkinson said in the letter. “A surge of cases of the BA.2 variant in Europe threaten a Covid resurgence in the United States, and your administration is currently advocating that Congress allocate tens of billions of dollars in additional Covid funding for testing, treatments, and other supplies our country needs to continue to battle the virus.”
Parkinson said an extension of the PHE will help long-term and post-acute care providers offer the most efficient and effective care possible at this point in the pandemic. Statute only allows the PHE to be extended for 90 days at a time.
Study projections of national health expenditures cover 2021 to 2030; overall health spending is expected to have decelerated from 9.7% in 2020 to 4.2% in 2021 due to federal relief funds drying up, like those seen in the Provider Relief Fund (PRF).
Through 2024, health care spending is expected to normalize after a tightening in extra federal spending related to Covid from 2020 to 2021.
Health insurance enrollments will revert back to pre-pandemic distributions, the study found, as remaining supplemental funding diminishes.
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