Medicare’s payment advisory panel is recommending no 2020 pay update for skilled nursing facilities, claiming that operators have adequate access to capital and a steady supply of beds.

Industry advocates countered that the sector faces “razor thin margins.” The 531-page report highlights that SNFs have seen a steady decline in non-Medicare margins, now at negative 2.4%, and total margins have plummeted 0.5%, “an unsustainable level that should sound the alarms for policymakers across the country,” said Mark Parkinson, president and CEO of the American Health Care Association.

“Both large and small skilled nursing providers across the country are experiencing financial challenges and potential insolvency because of dwindling margins. With providers declaring bankruptcy, and in some cases closing their doors, seniors and individuals with disabilities will face limited options for care,” Parkinson said Friday.

With Phase 3 of the Requirements of Participation arriving in November, shortly after the implementation of a new payment model, “it is irresponsible to recommend elimination of the payment update for fiscal year 2020,” added Aaron Tripp, VP of reimbursement and financing policy for LeadingAge. “The magnitude of the regulatory and payment changes that will take effect this fall cannot be successful with a payment cut.”

Commissioners have also endorsed revisions to the SNF prospective payment system for fiscal 2020 to recalibrate the relative weights of case mix groups to maintain alignment of payment and costs. Payments will be based on patient characteristics, including comorbidities, functional status, cognitive impairment and special services. The system would redistribute payments from high-therapy patients to those who are medically complex.

Still, things could be worse. Hospice caregivers would see a 2% cut to their base payment rates, while both home health and inpatient rehab providers would face 5% cuts, according to the Medicare Payment Advisory Commission’s report to Congress, issued Friday.