A funny thing happened on the way to a semi-annual eye-rolling over a MedPAC report. It gave me reason to sit up with interest. Even more unlikely, it contained information that made some long-term care providers happy.
Each December, the Medicare Payment Advisory Commission — MedPAC to most — openly holds discussion about recommendations it might make to mother ship Congress. This is when the feces usually hits the fan, for the advisory body never has anything good to say about skilled nursing payment rates. Never ever.
Oh, it says the rates are good all right. Too good, in fact. So then the panel votes yet again to recommend lowering payment rates.
Anyone with a sharp pencil or batteries in his calculator can’t really blame MedPAC commissioners for acting this way. It’s simple math. Providers acknowledge they’ve done well with Medicare rates. But, they quickly squeeze in, they need generous Medicare margins to offset meager Medicaid pay rates.
Well, the Medicare PAC’s job is to make recommendations based on what it knows about Medicare matters. It’s not some sort of college financial aid department charged with taking all types of revenue and income into consideration before issuing Uncle Sam U. scholarships. (Yet, it actually does discuss both the Medicare AND Medicaid margins and offer ideas for how to bring things closer to equilibrium in the 400-plus page report.)
Medicare margins in long-term care have been above 10% for a while, although the net overall margins are just 1.8%, both MedPAC and provider advocates agree.
Nonetheless, MedPAC’s “Surly 17” voted to eliminate any cost of living uptick in Medicare payments for next year. In addition, they recommend a 4% cut from current funding levels, as well as further cuts in subsequent years until better balance is achieved. It also calls for a revamping of the entire payment system.
Mark Parkinson, who leads the nation’s largest nursing home association, was aghast Tuesday at the final report. His outrage, however, has had time to build and be well-marketed. The above MedPAC observations and recommendations have been in the public domain since 2013 was still on our calendars.
MedPAC commissioners are tough with their rationale for advising cuts. They say that providers have been “nimble” about responding to past cutbacks. That’s both a backhand and a mouthful of euphemism if ever there were one.
The faint praise is followed by a damning reminder that, providers have compensated for past payment curtailment by extending lengths of stay and upcoding to more lucrative assessment categories.
In the end, the Medicare payment purveyors recommend Congress create some other mechanism to help nursing facilities cope with relatively low Medicaid payment rates.
Not surprisingly, Parkinson was having none of it Tuesday. He reiterated a call for targeting hospital readmissions and creating post-acute site-neutral payments for similar conditions.
He’s about as likely to get this as the typically ignored pay-cut recommendations are to be heeded. Providers, however, are rightly worried that while the market basket freeze and 4% pay cuts might not go into effect, something that is still draconian could advance out of Congress as a “compromise.”
That’s the doom and gloom from the new report. So what about the less depressing stuff?
As reported in Tuesday’s McKnight’s Daily Update, MedPAC also is pushing quality-of-care studies. You can read here how providers’ efforts seem to be paying off.
In brief, hospital readmissions dropped for the first time and discharges to community settings were up 2%. Both very good things.
Chapters 7 and 8 (8 in particular — pages 181-210 if you’re keeping score at home) hold the keys.
“One of the things that providers can benefit from is MedPAC is on the forefront of quality efforts,” says quality guru Andrew Kramer, M.D., the president of Providigm, a contract research group employed by the federal government.
“This keeps evolving. MedPAC is very forward-thinking.”
He acknowledges that the 400-plus pages that came out Friday largely address payment issues. But providers would be making a big mistake to not look deeper into the research on quality.
“To me, we’re at he very early stages of impacting this [quality levels],” Kramer told me. “It’s the first year rates are starting to improve after a decade of relatively flat research. We’re already talking about next year’s work. It’s going to push the frontiers again.”
With the help of MedPAC, no less.
James M. Berklan is McKnight’s Editor. Follow him @LTCEditorsDesk.