Reimbursement inadequacy remains a widespread issue, with Medicare Advantage plans being the main culprit when it comes to financial and administrative pressure.
In response, nursing home operators are limiting admissions from this payer type, while others have reduced services to pick up the slack, according to a survey conducted by Skilled Nursing News in anticipation of our PAYER Summit taking place in mid-June. Overall, operators are concerned about payment policies across both Medicare and Medicaid, and a majority of providers said a higher base reimbursement rate across all payers would have the greatest impact.
Medicare Advantage far and away poses the greatest financial pressure for nursing homes, with 56.3% choosing this payer, while 31.3% said Medicaid was their greatest financial pressure, including managed Medicaid and traditional fee-for-service Medicaid.
Private pay and state payers made up 6.3% of responses each.
And half of respondents said reimbursement rates were inadequate, while a little over a third of remaining respondents said their reimbursement was “somewhat adequate.”
About 56% of respondents said low reimbursement rates was the biggest challenge working with MA organizations, followed by administrative burdens at 43.8%. Prior authorization delays and denials or appeals were cited as the biggest challenge for 37.5% of respondents each.
A smaller group, 6.3%, said network limitations were the biggest challenge in working with an MAO.
About 75% of nursing home operators said they started limiting new admissions for certain payers as a reaction to payer reimbursement and administrative burdens. A quarter of providers said they increased billing staffing or outsourced reimbursement and administrative jobs to lessen such burdens.
And 18.8% reduced certain services like therapy to offset administrative burdens and reimbursement inadequacy.
As for Medicare fee-for-service (FFS), 31.3% said updates to the Skilled Nursing Facility Prospective Payment System (SNF PPS) had no impact on their ability to deliver services, while 25% said such changes negatively impacted services.
About 18% said they were unsure if SNF PPS changes even made a difference in their operations, while 12.5% reported a positive impact on services.
The Centers for Medicare and Medicaid Services (CMS) in April proposed a 2.4% increase to Medicare rates, which is set to be finalized in July.
Operators weighed in on Medicaid risks too, with 31.3% citing rate cuts and inadequate updates as their biggest Medicaid-related risk heading into next year.
This is despite the provider tax carveout for nursing homes in the federal budget. States will still need to balance the budget somehow, with roughly $1 trillion in cuts to Medicaid over the next decade.
And while SNFs are exempt from provider tax safe harbors decreasing from 6% to 3.5% starting in 2028, the sector will still need to contend with competition for a shrinking pool of Medicaid funding.
About 18.8% of providers said Medicaid eligibility, redeterminations and coverage churn was the most concerning risk, and the same number of respondents said denials, recoupments and Medicaid audits were keeping them up at night.
Only 12.5% of providers said payment delays were the highest Medicaid-related link.
An overwhelming 75% of respondents said higher base rates across all payer types would improve financial sustainability in the skilled nursing sector. Reduced prior authorization requirements was a runner up, with 43.8% of providers saying this change would improve finances.
About 25% of providers expect value-based incentives – with fair benchmarks and upside – would help with sustainability, and the same percentage of providers pointed to administrative simplification would help too.
Faster payments was top of the list for 18.8% of providers, while 6.3% said MA plans following Medicare FFS would help financial sustainability, perhaps an indicator of growing managed care acceptance among sector leaders.
To register for the PAYER Summit taking place June 17-18 in Chicago, visit https://hhcnpayersummit.com/.
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