MedPAC Approves Harsh SNF Payment Recommendations

The Medicare Payment Advisory Commission (MedPAC) voted earlier this week to recommend that the way skilled nursing providers (SNF) are paid by the government be drastically modified.  In a move consistent with recent years, MedPAC also voted to recommend that providers receive no Medicare inflationary pay increase in Federal fiscal year 2013.

MedPAC serves in an advisory role to Congress and issues formal recommendations twice yearly.  In recent years, Congress has routinely disregarded MedPAC recommendations to freeze or cut long-term care providers' reimbursement rates, but those past recommendations were not as comprehensive as those approved on Wednesday. Congress will formally receive these new MedPAC recommendations in March.

MedPAC is recommending that Congress eliminate the fiscal 2013 market basket update and directs the Secretary of the Department of Health and Human Services to revise the prospective payment system for SNFs in fiscal 2013.  Commissioners indicated that rebasing should begin in fiscal 2014, with an initial reduction of 4%, and subsequent reductions over an appropriate transition period until Medicare's payments are "better aligned with providers' costs."

The Commission also is recommending that Congress direct HHS to cut payments to SNFs with relatively high risk-adjusted rehospitalization rates for their Medicare-covered skilled nursing facility stays.

While generally supportive of the rehospitalization provision outlined by MedPAC, the American Health Care Association (AHCA) will continue its work with Congress to identify alternatives to the Medicare funding plan and SNF payment reductions outlined by MedPAC.