On March 15, 2022, the Medicare Payment Advisory Commission (MedPAC) issued its annual policy report entitled March 2022 Report to the Congress: Medicare Payment Policy. This report is part of the Commission’s legislative mandate to evaluate Medicare payment issues and to make recommendations to the Congress. In regard to skilled nursing facility services, the Commission is recommending that “for fiscal year 2023, the Congress should reduce the 2022 Medicare base payment rates for skilled nursing facilities by 5 percent.”
In making this recommendation, the Commission notes that though the new Patient-Driven Payments Model (PDPM) case mix system implemented on October 1, 2019 (FFY 2020) was intended to be budget neutral, CMS’ analysis projects that the new case-mix system increased payments in 2020 by 5.3 percent compared with what would have been paid under the old case-mix. The case-mix indexes (CMIs) for the nursing, speech–language pathology services, and NTA components were higher in 2020 than what CMS had estimated. After comparing the changes in the CMIs with and without the PHE/COVID-19 cases, CMS stated that it believed that the increases in CMIs and payments were largely unrelated to the PHE waivers and COVID-19 diagnoses.
The Commission also estimates that the all-payer total margin for nursing homes (reflecting all lines of business and all payers) in 2020 was 3 percent, a considerable improvement from 2019 (when it was 0.6 percent).
In making its overall determination to recommend a 5 percent reduction in the Medicare base rate, the Commission states that while the effects of the pandemic on beneficiaries and nursing home staff have been devastating, the combination of federal policies and the implementation of the new case-mix system resulted in improved financial performance for SNFs. The high level of Medicare’s payments indicates that a reduction to payments is needed to more closely align aggregate payments to aggregate costs.
You can view the entire report or sections of the report from the MedPAC Report webpage. Please click the following link for Chapter 7 section on Skilled nursing facility services