CMS announces 3.1% Medicare pay hike for skilled nursing facilities

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There is good news for nursing home operators: A Medicare inflationary pay increase has been recommended by the Bush administration. Medicare payment rates will rise by 3.1% in 2007, according to the Centers for Medicare & Medicaid Services.

That equates to a $560 million boost overall for the provider community. Earlier this year, the Medicare Payment Advisory Commission (MedPAC) recommended no increase be given. MedPAC has made similar recommendations in recent years but Congress ignored them in each instance.

Providers and federal officials hailed the pay hike, in part, because it implies there will be funding predictability and stability. That, according to provider advocates, helps prevent quality improvement interruptions.

Medicare currently pays for just 12% of nursing home residents, but it contributes 26% of residents' total funding revenues nationwide. Medicare effectively subsidizes what provider advocates call insufficient payments from the Medicaid program, which covers more than 60% of nursing home residents.

CMS also announced it planned to develop a sub-acute care payment plan that pays consistent rates for specific types of care, regardless of the care setting. In addition, the agency said it plans to make quality information more available to consumers, and promote health information technology to improve processes.