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MedPAC to Congress: Reduce SNF payments by 4% in 2014

March 18, 2013
by Pamela Tabar, Senior Editor
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The Ides of March brought more bad news on future Medicare payments to skilled nursing facilities (SNFs), as the Medicare Payment Advisory Commission (MedPAC) recommended a four percent reimbursement cut in 2014 and more reductions in subsequent years.

“Several aspects of how Medicare pays for PAC [post-acute care] undermine the efficient delivery of care, including the less-than-clear delineations of who needs PAC, the overlap of the services different settings provide, the absence of a common way to compare quality and outcomes across settings, and the lack of incentives to coordinate care among providers and safely transition beneficiaries home,” MedPAC wrote in the report submitted to Congress March 15.

The cuts are a reaction to the billions overpayments that have plagued the SNF-Medicare relationship for years. Most of the overpayments stem from upcoding or misrepresented therapy services, the report said. Last year, MedPAC had recommended that the entire SNF payment system be overhauled via prospective payment system (PPS) revisions and a freeze on updates for one year, but Congress has not yet acted on the recommendation. Without action, the trajectory pf skewed payment process will continue, MedPAC urges in the current report; asking Congress to force Health & Human Services to “revise the PPS and begin a process of rebasing payments.”

SNF weren’t the only entities targeted for payment reductions in the report. For home health agencies, “payments have consistently and substantially exceeded costs in the home health PPS,” with Medicare margins of 11–14 percent for the past 10 years. MedPAC's recommendations include a multi-phasae overhaul, "rebasing the home health PPS, changing the case-mix system, implementing a copay for certain home health episodes, and investigating and stopping fraud and abuse in areas with aberrant patterns of use of home health services."

Medicare’s Sustainable Growth Rate (SGR) also continues to be a problem, the report notes. “We recommended repealing the SGR, replacing it with legislated updates that would no longer be based on an expenditure-control formula, improving equity among primary care and specialty services, and creating incentives to move to more organized health care delivery systems,” the report commission wrote.

Some long-term care sectors received better news: MedPac recommended no Medicare payment reductions to hospices, inpatient rehab facilities or long-term care hospitals at this time.

MedPac provides Congress with Medicare payment reports in March and June of each year.

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