CMS Proposes Further Cuts to Therapy Providers With ‘No Relief on the Horizon’

Providers are staring down yet another slash to their bottom lines as the federal government last week proposed reductions to Medicare reimbursement for various Part B therapy services.

Early assessments of the 2023 Medicare Physician Fee Schedule Proposed Rule have found that cuts could fall between 4 to 4.5%, according to Mark Besch, senior specialist for government affairs and analytics at Aegis Therapies. 

“Though 4% is not draconian, in the context of what has been an annual decrease and will continue to be because of some of the code changes that will be coming into play in a year or two, there’s just no relief on the horizon,” Besch told Skilled Nursing News.

NASL Executive Vice President Cynthia Morton similarly believed the proposed rule could result in cuts between 3.2 to 5%, depending on the service.

“You can handle a 1% cut, but when you are getting to around four, that’s a chunk out of a service, especially if it’s a particular therapy service that is provided often,” she told SNN. “There’s [one service] called therapeutic activities and that is one of the most billed codes and that’s getting a 4.4% cut.”

This comes at a time when the industry is already facing a slew of cuts to reimbursement when costs are rising — resulting in even further tightening margins.

A 15% reduction in reimbursement for services provided “in whole or in part” by physical therapist assistants (PTAs) and occupational therapy assistants (OTAs) has already resulted in bottlenecks in access to care. That particular cut went into effect in January.

The industry is also awaiting CMS’s final rule for SNFs — expected sometime this month. The government agency proposed a 4.6% cut to the Patient-Driven Payment Model (PDPM), a $320 million loss, slightly offset by a $3.9% increase overall.

Combined with current staffing shortages and rising labor costs, reimbursement getting further reduced is expected to create an even more challenging environment for operators.

“It’s going to hurt operators with patients that need Part B therapy,” Morton said. “They could just be a short-stay patient that’s now going to need to stay [in a nursing home] for a longer period of time. Maybe their doctor prescribes some physical therapy because the patient’s core muscles are weak and thus they are at an extreme fall risk.”

She said this cuts right into that service and reduces what the nursing home is going to be reimbursed by that therapy specifically.

“We also have a real shortage of therapists so this is really decreasing the amount of resources CMS is sending to nursing homes to pay for therapy,” she said. “If a facility takes longer to get the therapy and help the patient recover, they may have to stay an extra three days, so it will impact length of stay.”

Morton also worries that it could lead to an access problem for rural operators especially.

The Alliance for Physical Therapy Quality and Innovation (APTQI) said in a statement that the proposed rule puts an increased pressure on a sector that is already struggling from continuous years of Medicare cuts.

Therapy more important than ever for operators

The benefits of physical therapy services show a short-term cost for long-term gains, according to a study conducted by APTQI.

The study, which looked specifically at low back pain, showed that Medicare spending for beneficiaries who received therapy first before other treatment options was 19% lower than those who received injections and 75% lower than those who had surgery, according to the data.

Beneficiaries who received therapy within the first 15 days compared to 45 to 90 days after being diagnosed were also observed to have downstream costs that were on average 27% lower, the study showed.

Despite the data, APTQI has seen cuts to the industry, including the 15% cut, lead to a decline in therapy services offered in rural and underserved communities.

The organization hopes to see Congress step up to delay the cuts being implemented.

“Medicare’s proposed payment reduction will risk generating higher costs to the Medicare program, limit access to safe, nonaddictive pain management techniques, and encourage increased marketplace consolidation, which data show increases spending,” Nikesh Patel, executive director of APTQI, said in the news release.

Besch and Martha Schram, president and CEO of Aegis Therapies, expect to see strong efforts by industry advocates to lobby Congress on delaying the reimbursement changes once again.

“Frankly I think Congress is beginning to get a bit tired of hearing about it,” Besch added.

Both he and Schram are concerned about how these continued cuts will impact facilities’ ability to provide therapy services, especially in rural areas, with no change in how needed these services are.

In fact, many hospitals and post-acute care facilities would argue that need has only increased as the patients that are heading to these facilities are sicker and more complex than ever before.

“If you look at it at this macro level, we’re going to incur yet another reduction; it just doesn’t seem consistent with the reality of what is happening for around practice costs,” Schram told SNN. “You put all that together and it becomes a more urgent problem.”

While she didn’t feel that therapy was being “targeted” per se, she questioned whether “spending neutrality” can really be a reality in the industry right now.

“There comes a point when we have to challenge this budget neutrality,” she added.

How operators will respond

Thomas Annarella, nursing home administrator for Illinois-based Valley Hi Nursing & Rehabilitation, said he doesn’t expect to make any immediate adjustments based on the new cuts.

“We just opened a therapy space addition with additional equipment for modality so we’re not looking to cut back on therapy, but it’s something that we’re certainly going to have to be mindful of going forward as an expense,” Annarella said.

He admitted that while Medicare payments are decreasing the cost of providing the services and medical supplies that are included in the per diem rate are going up — making it more of a financial crunch for operators.

“Essentially you’re taking less and with inflation, margins continue to shrink so we have to be very mindful of that,” he said. “It’s like a tacking pull, it’s being pulled in all different directions. I would imagine a true post-acute facility would be very concerned at this point about what those margins are going to look like in the next six to 12 months.”

Pennsylvania-based Concordia Lutheran Ministries’ President and CEO Keith Frndak said the fact that the sector hasn’t seen reimbursement increases in years combined with wage inflation – which has been around 8 to 10% for therapists in their market – has made his organization more selective in its admission process.

“It used to be that we would take all the short-term payers and could survive, but in this current economic climate, we have to be more selective in what insurers are paying. We can’t do a short-term rehab patient if we’re going to lose $60 or $70,” he said.

Frndak hoped CMS and other policymakers would take a more “marco” approach going forward.

“When you start adding on top of that costs for using occupational therapy assistants, or physical therapy assistants … Everybody has a little part of the puzzle to try to save money in this difficult time but when you put it together and stand back, it doesn’t seem sustainable,” he said.