MedPAC recommends no payment increase next year, providers protest

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Citing a Medicare profit margin of 11% for 2003 and a projected margin of 13% for 2005, the Medicare Payment Advisory Commission has recommended that skilled nursing facilities not receive a payment increase in fiscal year 2006.

Provider groups wasted no time in challenging these draft recommendations, which came out Thursday and will be voted on at the commission's January 2005 meeting. While the 17-member MedPAC advises Congress on Medicare payment policy, the recommendations are not binding.

Representatives of the American Health Care Association and the Alliance for Quality Nursing Home Care say that failure by the Medicare program to cover inflationary cost increases would be "failed policy" -- especially at a time of rapidly escalating staffing costs. 

AHCA and the Alliance said that that Medicare inflation adjustments are critical to continued quality improvement. Skilled nursing providers recently have had to endure many economic roller coaster rides of Medicare cuts and temporarily restored funding, causing degrees of instability, they pointed out.

AHCA President and CEO Hal Daub also noted that Medicare margins may appear high, but they are necessary to continue to make up for severe under funding by the Medicaid program.