During a House subcommittee hearing on post-acute care held on Tuesday, Medicare Advantage plans were the target of bipartisan criticism as lawmakers sought solutions to curb the declining access to and affordability of nursing home care, as well as other long-term care, amid staffing shortfalls and proposed Medicaid cuts.

Improper denials and delays by Medicare Advantage plans, and formulation of policies to reduce the burdens on nursing homes were key focuses of the Ways and Means Committee hearing titled, “After the Hospital: Ensuring Access to Quality Post-Acute Care.”

In stressing the importance of providing care in the right place, at the right time, and at the right price, lawmakers posed questions to expert witnesses from the nursing home sector, long-term care hospitals, home health care, and hospice care, and emphasized innovations such as telehealth, while offering policy recommendations to improve access and convenience for patients.

There was also a general consensus among legislators and experts that the proposed $880 billion in Medicaid cuts over 10 years, part of broader budget plans, could jeopardize the care of vulnerable populations, particularly seniors and individuals with disabilities.

Paul Dongilli, president and CEO of Madonna Rehabilitation Hospitals, shared the story of a 73-year-old patient to highlight the importance of long-term care hospitals (LTCHs) and the challenges facing LTCHs and nursing homes that partner with them. He said nursing homes weren’t functioning at full capacity due to the staffing issues, and that in turn was affecting care across the health care continuum.

LCTHs accessibility’s impact on SNFs

Moreover, reforms made to payment systems for inpatient rehab hospitals (IRFs) and skilled nursing facilities (SNFs) were beneficial to those industries, said Dongilli, but he also pointed out that LTCH payment systems had not undergone similar reforms. Instead, changes to LTCH payment systems focused primarily on payment criteria, which in turn has led to financial strain and closures of LTCHs.

The number of LTCHs decreased from 438 in 2015 to 341 in July 2024, with 17 additional closures announced for 2024 and 2025, he noted. These closures mainly occurred after the Centers for Medicare and Medicaid Services (CMS) implemented a new dual payment criteria system, which was likely missing patients who would have benefited from LTCH care. This has resulted in financial difficulties for LTCHs because of the high-cost outlier threshold, which allows hospitals to receive additional payments for extremely high-cost cases.

Over the last two years, the threshold for receiving these payments has increased significantly from $38,000 in fiscal year 2023 to $77,000 in fiscal year 2025. For small, independent, and rural LTCHs, these increases could lead to financial devastation, Dongilli said.

Congresswoman Carol Miller (R-Ill.) and Kevin Hern (R-Okla.), among others, have introduced various legislation to provide relief to the LTCH industry. The proposed reforms include adjusting the high-cost outlier threshold, expanding the standard rate to cover more high-acuity patients, and allowing direct admission to LTCHs from critical access hospitals. Dongilli urged that these legislative changes not be offset by cuts elsewhere in the health care industry.

Dongilli also discussed the deep impact of Medicare Advantage (MA) plans on access to post-acute care. Many MA plans deny nearly half of prior authorization requests for LTCH and inpatient rehab facility (IRF) admissions, leading to lengthy and resource-intensive appeals processes, he said. The resulting delays prevent patients from transferring to the next appropriate level of care in a timely manner.

“If it’s a patient who has Medicare Advantage, we have to take that clinical information, we have to provide it to the Medicare Advantage plan for approval to bring the patient in, often, what we see is an immediate denial,” said Dongilli. “What we find in our experience is that roughly, maybe 40% of the ones that are initially denied and are overturned during an appeal.”

CMS has proposed allowing neutral contractors to side with MA plans almost 100% of the time during appeals, which would further restrict access to necessary care, he said. Dongilli and the American Medical Rehabilitation Providers Association (AMRPA) recommended clear and consistent enforcement by CMS to uphold existing Medicare Advantage rules and urged greater congressional oversight, particularly regarding how MA plans’ behavior is reviewed.

Dongilli conveyed the urgency for swift congressional action given how fast the LTCH industry is shrinking. LTCH closures are limiting patient access to specialized care at a time when sometimes acute cases are having to be turned away due to the arduous MA pre-authorization process.

“An assessment on our patients is time consuming and resource intensive. The hospital that’s referring them may not want to work through that process with us, and so as a result, we’ll discharge the patient to a less intense setting where they don’t receive the care that they need, or they stay in the acute-care hospital and create throughput issues,” said Dongilli.

Lisa Grabert, a visiting research research professor at Marquette University, also discussed the lack of transparency around Medicare Advantage (MA) payment rates and the use of prior authorization by MA plans. She suggested that a better understanding and transparency into how MA plans use prior authorization could help balance the payment systems and reduce unnecessary delays in care.

Medicare needs overhaul

Meanwhile, Grabert also discussed the crucial need for Medicare reform, arguing that it was on an unsustainable path, with the Part A, or hospital insurance trust fund, expected to be insolvent in six years. A significant factor driving costs, she said, was the annual $60 billion spent on post-acute care, which encompasses home health, nursing homes, rehab hospitals, and long-term care hospitals. Providers in all these four sectors, she said, have remained profitable, with average marginal profits of 27% for nursing homes in 2022.

To counter costs, Grabert backed the IMPACT Act, created in 2013 and which aimed to establish a new Prospective Payment System (PAC PPS) for post-acute care. The goal was to streamline payments and improve care across these settings. The Trump administration included a unified PAC PPS in its 2021 budget proposal, she said, which could save $80 billion over ten years if implemented. The Centers for Medicare and Medicaid Services (CMS) submitted the technical prototype for this unified system in 2022, and Grabert strongly urged Congress to grant CMS the authority to enact it.

The PAC PPS would simplify and unify payments for post-acute care, Grabert said, encouraging policymakers to negotiate favorable outcomes for taxpayers in exchange for regulatory relief.

Medicaid cuts

Other members of the subcommittee sounded off on the impact of the proposed Medicaid cuts, on nursing homes, three out of five of which receive Medicaid funds.

“[Medicaid] is a tremendously big piece of reimbursement for nursing facilities. So with any dramatic cuts to Medicaid funding … the consequences fall to the states. [And] they don’t have enough money to do what they want to do, what needs to be done to cover the health care needs.,” said Eric Carlson, director of Long-Term Services and Supports Advocacy Justice in Aging.

If the Medicaid cuts were to be enacted, experts backed the view that many of the older adults deserving of nursing facility and other long-term care will be left out.

“Then it falls on the facilities that already aren’t adequately reimbursed,” Carlson said. “One way or another, it’s untenable when it comes to beneficiaries. They will be squeezed out of the system.”

Nursing homes in rural areas and certain states such as Alaska, Georgia, Louisiana or West Virginia, states with a higher percentage of Medicaid beneficiaries, will suffer the most, Carlson noted.

“The impact is even bigger in those states because of the percentage hit on nursing facilities. There’s not enough money for individuals, there’s not enough money for providers,” he said.

Democratic Congresswoman Linda Sanchez from California said that the sizable proposed cuts will restrict access to nursing home care in rural facilities in particular.

“Are Republicans still outraged about rural nursing facility closures because a $880 billion cut in Medicaid will close many of those rural facilities? So I urge you to stand up to oppose those cuts which will devastate those rural facilities,” she said.

Clif Porter, president and CEO of the American Health Care Association and National Center for Assisted Living (AHCA/NCAL), expressed gratitude for having the assoociation’s input included in the discussion at the House subcommittee’s hearing.

“[T]here are key areas where access can be improved—such as enhancing care coordination, strengthening Medicare Advantage, tackling workforce shortages, and preventing cuts to Medicaid,” Porter said. “We need to look at the bigger picture and the confluence of factors that contribute to our providers’ ability to maintain access, enhance quality care, and invest in improvements.”