AHCA Optimistic About SNF Rate Increase

We’re passing along some information provided yesterday, April 25th, by American Health Care Association (AHCA) President Mark Parkinson.

With respect to Medicare payment to skilled nursing facilities, rather than a proposed rule, the Centers for Medicare and Medicaid Services (CMS) will be issuing an Update Notice for the SNF Prospective Payment System (PPS) for FY 2013. The agency plans to publish this notice on or before July 31, 2012. This indicates that there will be no policy changes that would have required a Proposed Rule and a comment period.  Instead, the market basket update, along with a subtraction from the required productivity adjustment, will be announced.

As you are fully aware, skilled nursing care has taken several rounds of hits over recent years – health care reform, State Medicaid cuts, Congressional sequestration and bad debt reduction, and of course, last year’s SNF PPS rule. Fortunately, CMS recognizes the struggles we have undergone and the importance of returning stability to the profession.

After last year’s disastrous rule, we decided we needed a new approach – specifically, a proactive approach. We concluded that it was better to work with CMS before the agency issues a proposed rule or notice rather than wait to respond after policy decisions were already made. So, AHCA started working on the FY 2013 SNF PPS rule last fall. That work included continuous meetings and constant contact with CMS to exchange information, explain the financial predicament of our members and develop a relationship of trust. We believe this strategy helped play a role in today’s result.

With that, here is what we’re anticipating:

  • A market basket update of approximately 2.6%. The economic analysis firm Global Insight provides the data to CMS on the market basket. Currently, projections as of Q4 2011 indicate this to be 2.6%, but we continue to monitor for updates to see how data from Q1 2012 might affect this estimate.
  • A productivity adjustment of minus 0.8%.  This is due to the Affordable Care Act’s (ACO) stipulation that Medicare payments for SNFs be reduced $14.6 billion over 10 years. Yesterday, the LTCH PPS proposed rule and the IPPS proposed rule were announced and each had a minus 0.8% productivity adjustment, so we anticipate this is to be true for all providers considering the wording of the provision in the ACA.
  • Therefore, we are looking at an approximate 1.8% SNF payment update. This may change after Global Insight provides Q1 2012 data which would potentially affect the market basket update.

We do not expect that there will be a market basket forecasting error correction this year, since the difference between the FY 2011 CMS market basket update (2.3%) and the Global Insight FY 2011 estimate (2.2%) is less than the 0.5 percentage point threshold for triggering the market basket forecast error adjustment.