Nursing home industry experts are encouraging providers to keep a close eye on how their businesses will be impacted when Medicare Advantage penetration goes up, and to also watch for whether the federal Medicare rate adjustments for 2024 prove to be adequate.
Executives at Health Dimensions Group, a management and consulting organization that serves senior living, post-acute, and long-term care providers, went over factors that are often overlooked by providers in estimating costs, and that can ultimately prove the latest SNF reimbursements to be insufficient.
Providers have generally welcomed the Centers for Medicare & Medicaid Services (CMS) latest payment rate update to skilled nursing facility (SNF) reimbursements for fiscal 2024, which includes a net increase of 3.7%, or approximately $1.2 billion, in Medicare Part A payments to SNFs.
But, HDG experts cautioned providers to be more proactive in estimating all the costs involved.
One factor weighing down on SNF margins are lengths of stay at facilities. “We’re starting to see lower lengths of stay in skilled nursing, and we are sometimes seeing a diversion from skilled nursing,” said Heather Haberhern, SVP of Quality at HDG. There are also costs related to a greater administrative burden on providers to have reauthorizations done quickly as well as the financial impact of having to renegotiate these costs, she said.
Moreover, some larger economic factors might not be priced into the payment rate update, Haberhern said. And while many nursing home providers may look at the net increase as a positive, it is not enough, especially when considering high inflationary pressures – inflation is estimated to be 6.1% – and wage increases of 15% to 20% in certain markets. “So this is still not quite enough for providers to thrive,” she said.
HDG executives also went over changes to the Minimum Data Set (MDS), which will be effective on October 1st, including the new focus on social determinants of health, capturing more demographic data on race, languages spoken, transportation access and health literacy, and a reinforced focus on mental health.
“Having a way to see from monitoring the social determinants is going to give us the ability to plan ahead,” Sara Deiter, VP of Consulting, said. “It’s going to give us the ability to decide what needs to happen next. So, it’s a very important data section and changes really reinforce the commitment that CMS made for us in October that has to do with behavioral health.”
