Skilled Nursing to Face Further Medicare Cuts from Fiscal Cliff Deal

| January 21, 2013

While the fiscal cliff may have been averted with the passing of the American Taxpayer Relief Act of 2012 (ATRA), provisions within the deal will further reduce Medicare payments to skilled nursing facilities (SNFs), according to recent findings from Avalere Health in conjunction with the Alliance for Quality Nursing Home Care (AQNHC).

Using extrapolated data from the Congressional Budget Office (CBO) estimate of $1.8 billion in savings from 2013-2022, Avalere estimates that ATRA provisions will cut payments to SNFs by $600 million over that period.

These findings add to the already $65 billion in Medicare reductions SNFs are expected to face over the next ten years. 

“Our analysis found that of the $6 billion in total Medicare payments for outpatient therapy (the figure reported by MedPAC), approximately $2 billion was paid to SNFs,” said Emil Parker, an Avalere Director. “This figure does not include payments for therapy provided in the SNF setting by affiliated therapy companies but not billed for by SNFs.”

In 2012, Medicare reduced a portion of Part B payments when patients receive multiple therapy procedures on the same day by 20% for outpatient settings and 25% for inpatient settings such as SNFs, as outlined by the Multiple Procedure Payment Reduction (MPPR). 

Originally designed for therapy delivered in outpatient settings, MPPR was based on the assumption that Medicare beneficiaries need consecutive therapy sessions from multiple therapy disciplines in a single outpatient visit, writes AQNHC.

This is compounded on further research indicating that 50.2% of nursing patients requiring more than one type of therapy, according to a 2009 report entitled Developing Outpatient Therapy Payment Options.

These further cuts to Medicare threaten the future of SNFs care services.

“These cuts are compounded by freezes or cuts in Medicaid rates in 40 state Medicaid programs,” writes AQNHC President Alan G. Rosenbloom. “Given that 70% of SNF patients depend upon Medicare and/or Medicaid funding for their care, the economics of SNF care are in turmoil.”

Written by Jason Oliva


Category: Medicare and Medicaid, Senior Care, Skilled Nursing

Comments (1)

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  1. Chris_Foley says:

    With reductions in Medicaid and the above cuts in Medicare, this may intensify the competitive battle between nursing home companies for private pay residents while at the same time possibly pushing private pay residents to bear some/more of the costs to fund Medicaid & Medicare residents. Increased competition for residents while charging higher prices? That's a tough marketing nut to crack. Hopefully, this type of competition will continue to improve the industry but will be asking Owners, managers and staff to do more with less.
    Chris Foley
    Sr. V P
    cfoley@Equity.net