Medicare spending on skilled nursing facilities increased by more than $1 billion between 2019 and 2020 despite the fact that fewer beneficiaries used the services in 2020, according to a new analysis.
The findings could be used to support recent calls for reimbursement changes that would better align payments with costs.
The report, which was released Wednesday by the Kaiser Family Foundation, found that total spending for traditional Medicare SNF services increased from $24.9 billion to $26 billion between 2019 and 2020 — a 4.4% increase.
COVID-19 dominated much of 2020, in many cases, driving up length of stay and more expensive services such isolation care or respiratory services. Even as the virus has become more manageable, SNF providers must continue to take precautions as they continue to accept COVID-positive patients.
Researchers added that Medicare spending growth for SNFs is projected to slow once the public health emergency experiences and associated waivers end.
At the same time, the number of traditional Medicare beneficiaries that received SNF services continued to decline — dropping from 1.5 million in 2019 to 1.3 million in 2020. The number of Medicare beneficiaries using SNF services has been on a continual decline since 2010, when 1.8 million beneficiaries, or 5.4% of all beneficiaries, used such services.
Researchers also found that SNF spending per user increased by 16.3% — rising from $16,670 in 2019 to $19,394 in 2020. SNF stays were also longer in 2020 when compared to 2019. The average length of stay was 26.3 days in 2020, compared to 24.7 days in 2019.
“The higher spending is explained by longer and more expensive SNF stays in 2020 compared to 2019,” researchers wrote. “The longer, more expensive stays are likely the result of a change in the composition of Medicare beneficiaries admitted to SNFs, combined with revisions to the SNF prospective payment system (PPS) that went into effect in October 2019.”
The findings, however, support a March recommendation from the Medicare Payment Advisory Commission to cut base pay for skilled nursing facilities. The advisory group found that despite a decline in volume, Medicare’s aggregate fee-for-service spending on nursing homes rose 2.7% between 2019 and 2020.
“The high level of Medicare’s payments indicates that a reduction to payments is needed to more closely align aggregate payments to aggregate costs,” the commission recommended.
