‘Further Squeezed’: Medicare Advantage Reimbursement Cuts Could Dig into Nursing Home Payments

Medicare Advantage plans might lower their payments to nursing homes in 2025, to absorb the federal government’s benchmark rate cut to insurers.

Nursing home advocacy groups are worried that this move by the Centers for Medicare & Medicaid Services (CMS) to cut Medicare Advantage rates may be passed on to nursing home providers.

The Medicare Advantage benchmark rate, or the difference between expected average change in revenue and the MA risk score trend, will decline by 0.16%, CMS said in its final rule last week.


In the latest proposed payment rule for skilled nursing facilities (SNFs), CMS said it intends to increase Medicare Part A payments to SNFs by 4.1% in fiscal year 2025. However, this increase could be offset by not only high operational costs but also the Medicare Advantage payment reduction.

Nisha Hammel, ‪vice president for Reimbursement Policy & Population Health at the American Health Care Association/National Center for Assisted Living (AHCA/NCAL), told Skilled Nursing News that it was important to keep nursing homes safe from bearing the load of lower Medicare Advantage reimbursements.

“We recognize that while the overall payment rate is a net positive, it is critical that the burden of this cut to Medicare Advantage base payments does not fall on the shoulders of providers or beneficiaries,” Hammel said. “The reality is that long-term and post-acute care providers are already facing constrained reimbursement rates that have been further squeezed by workforce challenges and rising inflation. We must protect seniors’ access to high-quality care and services by ensuring providers have the resources they need.”


Such concerns are all the more palpable due the growth of Medicare Advantage over Fee-For-Service Medicare, with MA market penetration in states like California of over 70%. Also to note, Medicare Advantage plans pay less than Traditional Medicare by up to 25%.

Meanwhile, financial analysts told Modern Healthcare that the Medicare Advantage base rate cut could prompt insurers to reduce payments to SNFs as they seek to adjust premiums, benefits, provider reimbursements, among other steps to maintain profitability.

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