Providers fuming after MedPAC calls for cancellation of Medicare pay raise

Payments can accommodate cost growth, MedPAC said.
Payments can accommodate cost growth, MedPAC said.

The nursing home industry's largest trade group is pushing back hard against MedPAC's recommendation that the Centers for Medicare & Medicaid Services forego its planned request for $500 million in increased nursing home funding for fiscal 2016.

In its proposed rule published in the April 20 Federal Register, CMS said it was seeking a 1.4% net hike in the nursing home Medicare payment rate. The rate increase would reflect a market basket increase of 2.6% and two reductions — a 0.6% cut for productivity adjustment, as required by the Affordable Care Act, and a 0.6% trim as a forecast error adjustment.

In a May 19 letter to CMS Acting Administrator Andy Slavitt, MedPAC Vice Chairman Jon B. Christianson, Ph.D., said the commission “believes no update is warranted” because “Medicare's current level of payments appears more than adequate to accommodate cost growth, even before any update.” Christianson, who also serves as health policy and management professor at the University of Minnesota's School of Public Health in Minneapolis, said MedPAC came to that conclusion after reviewing such things as indicators of beneficiary access, the volume of services, the supply of providers, and access to capital.

MedPAC is a nonpartisan advisory body that provides Congress with analysis and policy advice on the Medicare program.

The panel argues that the aggregate Medicare margin for freestanding nursing homes in 2013 was 13.1% — the 14th consecutive year it exceeded 10%. But the American Health Care Association shot back at Christianson's request, claiming MedPAC's own research shows that nursing homes operate at an overall margin of only 1.9%.

The commission also complained that several reforms CMS has promised to payment systems have gone mostly unaddressed, including continued inaccuracies and excessive rehab therapy payments. Christianson also used his May 19 letter to remind Slavitt that the commission last March recommended that Congress eliminate the market basket update, revise the prospective payment system, and rebase payments beginning with a 4% reduction to the base rate. MedPAC also called for CMS to move more aggressively toward value-based purchasing and quality reporting programs.

Comments to the CMS proposed rule are due June 19.