Nursing homes' 1% Medicare pay increase 'unlikely' to cover costs, expert warns

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Providers expressed gratitude Tuesday at a 1% increase from the Centers for Medicare & Medicaid Services for skilled nursing services, even as it braced for quality measure implementation.

The increase translates to around $370 million more next year in aggregate payments to nursing homes. That's “critical” for SNFs, said Mark Parkinson, president and CEO of the American Health Care Association/National Association for Assisted Living.

“While there are some suggestions we offered that were not incorporated, AHCA is pleased CMS expressed willingness to work with providers on updates to the market basket going forward,” he said. “We are still reviewing the separate pre-rule notice issued by CMS and look forward to a dialogue with CMS on improving the SNF payment system.”

Betsy Rust, CPA, a partner in Healthcare Consulting at Plante Moran, however, warned the increase is unlikely to cover wage and benefits for SNFs in a competitive labor market, nor an “increase in per diem SNF costs that has resulted from spreading costs like admissions, care planning, and discharge planning over shorter lengths of stay.”

Plus, the final 2018 PPS rule included additional proposals such as an exchange function approach to set value-based incentive payment adjustments starting Oct. 1, 2018. The SNF VBP's scoring and operational policies for its first year will include one readmission measure for each year. CMS said the total amount of value-based incentives that can be made to SNFs in a fiscal year will be 60% of the total amount withheld from SNF Medicare payments for that fiscal year, as estimated by Secretary of Health and Human Services Tom Price, M.D.

CMS also announced the final version of the SNF Quality Reporting Program, with functional measures such as changes in a mobility score hitting in FY 2020.

While expecting and appreciative of the moderate increase, National Association for Support of Long Term Care's Cynthia K. Morton said many are now focused on the quality measures, payment models and the Resident Classification System, Version I (RCS-1).

“These quality measures will help providers communicate to the public the type of care being provided to our patients,” Morton said. “The measure formulas are very complicated and as these are rolled out over time, we hope that CMS will work just as hard to detect shortcomings in the measures as hard as they work to implement the measures.”