Monday, December 11, 2017

Preliminary Medicare Payment Advisory Commission (MedPAC) SNF Payment Policy Recommendations and U-PAC Development

Carly Sfregola

The Medicare Payment Advisory Commission (MedPAC), a nonpartisan legislative branch agency that provides the U.S. Congress with analysis and policy advice on the Medicare program, met last week to discuss post-acute payment.

As per MedPAC’s annual discussion, an overview of the industry is presented.  In 2016, there were approximately 15,000 SNF and 1.6 million beneficiaries who used SNF services. Of the Medicare stays and spending, 11% of days were attributed to Medicare fee-for-service and 20% of revenues.  MedPAC reported SNF margins have decreased slightly year over year.  See Chart 1, below.

Chart 1.  Year by Year MedPAC SNF Margin Figures

In terms of outlook the verbally articulated 2018 projected SNF Medicare FFS margin is 9%. However, the Commission went on to state that:

  • Level of Medicare payments to SNFs remain too high; 
  • SNF PPS needs to be revised; 
  • Wide variation in margins reflected differences in patient selection, service provision, and cost controls. 

Preliminary 2018 Recommendation
Congress should:

  • Eliminate the market basket update for skilled nursing facilities for fiscal years 2019 and 2020;  
  • Direct the Secretary to implement a redesigned prospective payment system (PPS) in FY 2019 (e.g., the proposed Resident Classification System Version 1 (RCS-1); and
  • Direct the Secretary to report to the Congress on the impacts of the revised PPS and make any additional adjustments to payments needed to more closely align payments with costs in FY 2021. 

For more detail, find the full summary here.

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