A stethoscope on top of a pile of money
Credit: Aslan Alphan/Getty Images Plus

The Medicare Payment Advisory Commission’s recommendation to cut base pay by 5% for skilled nursing facilities in 2023 doesn’t reflect the current state of the skilled nursing industry, according to the nation’s largest nursing home association. 

The advisory panel released its annual report to Congress on Tuesday. As McKnight’s previously reported, the 5% SNF cut suggestion was widely expected and included in MedPAC’s draft recommendations released in January.

The group’s report states that despite a decline in volume, Medicare’s aggregate fee-for-service spending on nursing homes rose 2.7% between 2019 and 2020, thanks in part to the new case-mix system and the COVID-related policies. On a per day basis, payments to providers increased more than 8% for SNFs, while costs grew just 2.1%. 

“While the effects of the pandemic on beneficiaries and nursing home staff have been devastating, the combination of federal policies and the implementation of the new case-mix system resulted in improved financial performance for SNFs,”MedPAC report authors wrote.. “The high level of Medicare’s payments indicates that a reduction to payments is needed to more closely align aggregate payments to aggregate costs.” 

MedPAC also noted that Medicare margins were 16.5% without federal relief funds. When accounting for relief payments, margins were 19.2%.

“The MedPAC report is outdated and obsolete at this point. Data from 2020 does not reflect the current state of the skilled nursing industry,” Mark Parkinson, President & CEO of the American Health Care Association/National Center for Assisted Living, told McKnight’s Long-Term Care News in a statement Wednesday. 

Parkinson argued that since 2020, nursing home labor costs have skyrocketed and margins in 2022 are projected to be negative 4.8%.

“Policymakers need to look at the most recent data and the whole picture when making reimbursement decisions that impact nursing homes. Failure to do so threatens access to care for hundreds of thousands of seniors,” Parkinson said. 

As an advisory body, MedPAC can only make recommendations to federal lawmakers, who are then free to pursue changes, if any, as they see fit. Since well before the pandemic, Congress has routinely not acted on the group’s recommendations, which routinely have called for no pay hike.