Public Payers News

SNF Medicare Reimbursement Expected to Rise by $800 Million

CMS predicts that Medicare reimbursement will increase by 2.1 percent or $800 million among skilled nursing centers next year.

By Vera Gruessner

Last week, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule that changes the Medicare reimbursement policies at skilled nursing facilities for 2017. Essentially, the proposed rule further brings Medicare payments toward value-based care instead of fee-for-service reimbursement, according to a press release from CMS.

Value-Based Care Reimbursement

The federal government is attempting to ensure Medicare reimbursement  as well as other payment systems within the healthcare industry are based on quality of care instead of quantity. By the end of 2018, 50 percent of Medicare reimbursement is expected to be in the form of alternative payment models.

At this point in time, already 30 percent of Medicare payments are utilizing alternative payment models. The proposed rule for skilled nursing facilities is meant to further reduce spending and deliver enhanced medical care.

The public comment period for this particular proposed rule will last until June 20, 2016. Aggregate Medicare payments are expected to rise slightly among skilled nursing facilities in 2017. CMS predicts that Medicare reimbursement will increase by 2.1 percent or $800 million among skilled nursing centers next year.

The Improving Medicare Post-Acute Care Transformation Act of 2014 has mandated that skilled nursing facilities begin implementing quality reporting starting in fiscal year 2018. Those medical settings that do not participate in the Skilled Nursing Facility Quality Reporting Program will be subject to a 2 percent reduction in their annual Medicare reimbursement updates.

CMS has proposed one assessment-based quality reporting measure and three claims-based measures in the new proposed rule for the SNF Quality Reporting Program.

These particular measures are similar to the ones for long-term care hospitals’ and inpatient rehabilitation centers’ quality reporting requirements. Section 215 of the Protecting Access to Medicare Act of 2014 mandates that Medicare reimbursement is in the form of value-based care incentive payments for skilled nursing facilities starting in 2019. This means that Medicare payments will be made to these facilities based on their overall performance.

For instance, the proposed rule from CMS has established the SNF 30-Day Potentially Preventable Readmission Measure, which means that skilled nursing facilities will be responsible for ensuring all patients who have been discharged from the hospital are at low risk of being readmitted over the following 30 days.

This is another means of utilizing preventive medicine, which focuses on bringing greater patient monitoring and medication adherence so that fewer patients end up back in the hospital soon after discharge. This could also include educating patients on the importance of physical fitness, nutrition, and the need to quit smoking or reduce alcohol intake.

Last year’s CMS policy changes to skilled nursing reimbursement predicted that cumulative payment rates would rise by $500 million or 1.4 percent. However, these type of predictions are not set in stone and the actual increases may vary as time shows the true story of Medicare reimbursement.

Much like last year, CMS is still focused on strengthening a quality-based timeline for its value-based care payment model. In fact, value-based care reimbursement has been shown to decrease health insurance costs.

“We actually are very favorably disposed towards a value-based care model,” Tariq Hilaly, CEO of Lumity, told HealthPayerIntelligence.com. “Fundamentally, you can make the insurance purchase more efficient, but if you really want to help employees manage costs beyond that, you really need to get away from this fee-for-service model where people are not looking at value in the equation of how treatment is delivered.”

“Initially, people think, ‘well, this is valuable to the employer and not the employee,’ but I would argue that’s, in fact, not true. If you look at it nationally, between premium contributions and out-of-pocket expenses, employees pay 40 percent of the cost of healthcare today. That’s a huge departure from 15 years ago when they really didn’t have much skin in the game. Today, they do have a lot of skin in the game.”

“If you look at it nationally, that is one of the biggest single expenditures so we find that employees are highly engaged in trying to figure out how to get more value-based and more efficient care delivery. Quite simply, they’re paying a good chunk of it.”

In addition to value-based care reimbursement, CMS has stressed the importance of adopting and implementing new technologies in order to reduce wasteful healthcare spending. Skilled nursing facilities will also need to incorporate health IT strategies in order to better manage their financial resources.

Health insurers, hospitals and healthcare providers may need to pay closer attention to the reforms taking place at CMS in order to bring about a reduction in wasteful spending and improve patient outcomes. By focusing on value-based care payment reforms such as bundled payments or the participation in accountable care organizations, payers can play a role in reducing healthcare costs and boosting the quality of medical services.