MedPac's proposed pay cuts for SNFs expected in 2023
Lina Camacho • March 25, 2022
In their annual March report, MedPac, the Medicare Payment Advisory Commission, has recommended cutting base pay for skilled nursing facilities by 5% in 2023.
The recommendation does not come as a surprise to skilled nursing facilities, as MedPac has repeatedly brought the issue in front of Congress for several years now. In their 2021 report, the association said, “The goal of the recommendations is to lower Medicare spending while maintaining beneficiaries' access to care.”
This cut would not reflect the current state of the skilled nursing industry—and all its stakeholders—according to Mark Parkinson, President and CEO of the American Health Care Association (AHCA). In late 2021, Parkinson warned that the 5% pay decrease would be considered a major misstep. In a statement, ACHA said, “If Congresses would heed such advice from its non-binding advisory arm, the effects could be devastating to facilities … resources shouldn’t be taken away from those fighting on the frontlines.”
The proposal was brought back to Congress’ attention in this year’s March annual report, released on March 15, 2022. The association claims that they based recommendation on four factors: access to care, quality of care, access to capital, and Medicare payments as they relate to costs. A report also states, “while the effects of the pandemic on beneficiaries and nursing home staff have been devastating, the combination of federal policies has resulted in improved financial performance for SNFs.”
Thanks to COVID relief and stable government funding, MedPac is justifying its proposal for a 5% pay cut for skilled nursing facilities, also noting that Medicare margins for SNFs increased in 2022 to 16.5%. Adding in additional relief, total margins increase to 19.2%.
In addition to AHCA’s negative response to the proposal last year, SNF operators have come out to argue that positive Medicare margins are necessary to balance out Medicaid payments that often don't cover the cost of patient care. They claim that it doesn't consider the real impact this reduced funding can and will have on facilities and their patients. Likewise, post-acute care advocates have voiced their concerns.
According to the Centers for Medicare and Medicaid Services (CMS), the Medicare Sequestration cuts that were rolled back at the beginning of 2020 will be phased back in, starting April 1. The cuts are expected to affect patients' access to care by reducing provider payments across the board. For example, CMS estimates that payments to doctors and other health care professionals who treat Medicare patients will be reduced by 9% over the next year, as a result of these cuts.
The American Health Care Association (AHCA) held a meeting on Friday, March 25 with a top White House official to discuss the struggles the industry faces leading up to AHCA’s congressional briefing in June. The meeting is part of AHCA’s strategy to speak with as many government officials as possible about their concerns.
Mark Parkinson, president and CEO of AHCA, said that the group has been working for months with hospitals, doctors, insurance companies and other professionals to ensure that the health care industry can continue to thrive after the implementation of AHCA.
Skilled nursing facility