Each year The MedPAC (Medicare Payment Advisory Commission) assesses the adequacy of fee for service Medicare payments by reviewing indicators in four categories of payment adequacy:
- patient’s access to care,
- the quality of that care,
- providers’ access to capital, and
- the Medicare payments and providers’ costs.
On January 13-14, 2022, I attended the public meeting and was shocked to hear what MedPAC will recommend to the Congress regarding 2023 Medicare payments. If you are not sure what MedPAC is, MedPAC “is an independent congressional agency established by the Balanced Budget Act of 1997 (P.L. 105-33) to advise the U.S. Congress on issues affecting the Medicare program. In addition to advising the Congress on payments to private health plans participating in Medicare and providers in Medicare’s traditional fee-for-service program, MedPAC provides information on access to care, quality of care, and other issues affecting Medicare.” The 17 Commissioners have diverse expertise in financing and care delivery. Staff research and comments from interested parties is taken into consideration when formulating their recommendations to the Congress in two reports that are issued in March and June each year.
The information provided to MedPAC, regarding Skilled Nursing Facility payment adequacy, reports that adequacy indicators are generally positive, despite COVID. They reported that the supply of providers is stable, SNFs had adequate access to capital, and all-payer total margin increased to 3% in 2020 (an increase from .6% in 2019). Furthermore, they reported that the aggregate Medicare margin in 2020 was high, at 16.5% and the median Medicare margin for efficient providers was even higher. The projected Medicare margin for 2022 is 14%.
The draft recommendation proposed for Fiscal Year 2023 for SNFs includes:
Congress should reduce the 2022 Medicare base payment rates by 5% stating,
“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. The high level of Medicare’s payments indicate that a reduction to payments is needed to more closely align aggregate payments to aggregate costs.” “….This Recommendation would lower program spending by more than $2 billion for fiscal year 2023, and by more than $10 billion over five years. Given the high level of Medicare’s payments, we do not expect adverse impacts on beneficiaries. Providers should continue to be willing and able to treat beneficiaries.” MedPAC transcript page 83
The Commission voted unanimously to recommend to the Congress, for Fiscal Year 2023, the Congress reduce the 2022 Medicare base payment rates. (MedPAC transcript page 87, 88, 89 beginning on line 10, “The recommendation reads, “For fiscal year 2023, the Congress should reduce the 2022 Medicare base payment rates for skilled nursing facilities by 5 percent.”)
They voted unanimously even though the Commission had discussion regarding how broken nursing home payment is before COVID and because of COVID, magnified the problem; staffing is at an all-time crisis right now, and “the answer is probably putting more money into staff, yet we’re talking about a decrease…””…Nursing homes, as a whole, are probably underfunded publicly, yet Medicare is overpaying, and that disconnect across Medicare and Medicaid has really hamstrung this industry for a long time.” (Transcript Page 84). One Commissioner stated on page 85 of the transcript,
“Everyone is so traumatized they’re having post-traumatic stress disorder and can’t function.”
Other care settings were discussed as well and recommendations to the Congress determined. You can view the presentations on the MedPAC website or click this link to information from the January 13-14, 2022 meeting. Here is the direct link to the PowerPoint for the Assessing payment adequacy and updating payments for Skilled Nursing Facilities, Home Health Agencies, Inpatient Rehabilitation Hospitals, and Long-Term Care Hospital services.
Cut Medicare base rates?? We are still under a Public Health Emergency (PHE). We don’t have enough healthcare workers and the ones we have are severely fatigued. PPE costs increased again and at the same time when MedPAC voted unanimously to cut Medicare payments to SNFs, the Omnicron COVID-19 variant was raging. Sad times we are living in.