MedPAC Recommendations for Skilled Nursing Facility Payments

On December 8, 2016, the Medicare Payment Advisory Commission (MedPAC) met to discuss the future of skilled nursing facility (SNF) prospective payment system (PPS) payments. For fiscal year 2018, MedPAC recommends that Congress eliminate the market basket increase and also rebase the PPS structure. This proposal aligns with the recommendations of MedPAC over the last several years. To date, Congress has not acted upon these recommendations.

MedPAC cites the following factors in their determination that SNFs do not need a Medicare payment increase:

• There is adequate and stable access to SNF care for beneficiaries and the occupancy rates remain stable at 86%.
• Admissions were up by 3.2%, although the length of stay was down 4.0%.
• Access to capital remains adequate.
• SNF Medicare margins in 2015 were at 12.6%. This marks the 16th year in a row that SNF Medicare margins were over 10%.

Since payments are primarily driven by therapy, rather than by other patient characteristics, MedPAC is also recommending a rebasing of the SNF PPS to reflect additional factors in the payment amounts. This recommendation is in line with the recent study by Acumen presented to the Technical Expert Panel on October 14, 2016, which favors changing the SNF PPS to incorporate 5 factors into payment:

1. Physical and occupational therapy.
2. Speech language pathology.
3. Nursing.
4. Non-therapy ancillaries.
5. Non-case-mix.

It is expected that the change in SNF PPS will take place, possibly as early as fiscal year 2018. At Marcum, we’ll be watching these developments closely and will issue additional articles as soon as we have more information. In the meantime, if you’d like to discuss how these potential rate changes could affect your bottom line, please contact a Marcum advisor.

Information contained herein is accurate at the time of publication. We recommend that you consult with your Marcum advisor before implementing any action.