Avalere Finds SNFs Face Still More Medicare Cuts Due to Fiscal Cliff Package

New Multiple Procedure Payment Reduction (MPPR) Disproportionately Impacts Skilled Nursing Facility (SNF) Sector, Already Slated to Absorb $65 Billion Medicare Reductions Over Ten Years

Jan 16, 2013, 10:18 ET from Alliance for Quality Nursing Home Care

WASHINGTON, Jan. 16, 2013 /PRNewswire/ --The Alliance for Quality Nursing Home Care (AQNHC) today released new data from Avalere showing that provisions contained in the fiscal cliff package (ATRA) will further reduce Medicare payments for skilled nursing facility (SNF) care – adding to the $65 billion in SNF Medicare reductions already scheduled to take effect.

"Our intent is to ensure lawmakers are fully aware that as a result of ATRA, the SNF sector absorbed yet another substantial Medicare funding cut in a manner that disproportionately impacts skilled nursing, and comes on top of SNFs already absorbing $65 billion Medicare reductions over the next ten years," said Alan G. Rosenbloom, President of AQNHC. "Additionally, the therapy changes under ATRA disregard the crucial role SNFs play in providing the specialized care and therapy vital to patient rehabilitation, central to avoiding costly rehospitalizations."

MPPR Background – When beneficiaries receive therapy services in SNFs, payments often are made through Part B rather than Part A of the Medicare program. Under Part B, inpatient and outpatient providers are paid under one fee schedule, although the severity of patient illness and the degree to which patients are clinically compromised is much greater in the SNF setting than in outpatient settings.  Consequently, it is more costly to provide multiple therapy treatments to SNF patients than it is to do so for outpatients.  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 like SNFs.  ATRA further reduced this payment starting on April 1, 2013.

Avalere Finding – "Extrapolating from the CBO estimate of $1.8 billion in savings over ten years (FY 2013 – FY 2022), we estimate the ATRA provision will cut payments to SNFs by approximately $600 million over that period," said Emil Parker, an Avalere Director. "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.  This figure does not include payments for therapy provided in the SNF setting by affiliated therapy companies but not billed for by SNFs."

The MPPR policy, originally developed for therapy delivered in "outpatient" settings, was based on the assumption that Medicare beneficiaries need consecutive therapy sessions from multiple therapy disciplines in a single outpatient visit.  For beneficiaries in SNFs, it is often medically appropriate to schedule rest periods between therapy sessions to facilitate full recovery and shorter lengths of stay. Therefore, the administrative costs of providing multiple therapies in the same day are higher in SNFs than in outpatient settings. Further, research indicates that 50.2% of nursing facility patients receiving outpatient therapy require more than one type of therapy. Source: Amy Kandilov, et al (2009) Developing Outpatient Therapy Payment Options (DOTPA): 2007 Utilization Report, Research Triangle Institute (RTI).

Concluded Rosenbloom: "More than $65 billion in Medicare cuts to SNFs over a ten-year period creates enormous instability in an important sector of the elder care system. These cuts are compounded by freezes or cuts in Medicaid rates in 40 state Medicaid programs.  Given that 70 percent of SNF patients depend upon Medicare and/or Medicaid funding for their care, the economics of SNF care are in turmoil.

"As policymakers seek to constrain health care spending, we urge them to consider systemic post-acute payment policy reforms that will save Medicare resources and rationalize the post-acute system.  In the long run, such reforms will assure Medicare beneficiaries receive the high quality SNF care and services they require." 


Contact: Rebecca Reid

SOURCE Alliance for Quality Nursing Home Care