Healthcare reform, Payment/economy

Fiscal cliff impact: SNFs facing more Medicare cuts

Provisions contained in American Taxpayer Relief Act (ATRA), known colloquially as the fiscal cliff deal, will further reduce Medicare payments for skilled nursing facility (SNF) care, according to a press release from The Alliance for Quality Nursing Home Care (AQNHC).

An analysis from Avalere Health shows that by extrapolating from the Congressional Budget Office estimate of $1.8 billion in savings over 10 years (FY 2013 to FY 2022), it estimates that the provision in the fiscal cliff deal will cut payments to SNFs by approximately $600 million over that period.

A main component in the reduced payment has to do with multiple procedure payment reductions (MPPR). Payments are often made through Part B rather than Part A when patients receive therapy services in SNFs and under Part B, inpatient and outpatient providers are paid under one fee schedule. It is more costly to provide multiple therapy treatments to SNF patients than it is to do so for outpatients. As a result, in 2012, Medicare reduced a portion of Part B payments when patients receive multiple therapy procedures on the same day by 20% for outpatient settings, and 25% for inpatient settings such as SNFs. The fiscal cliff deal further reduces this payment starting on April 1, 2013, according to the press release.

“Our intent is to ensure lawmakers are fully aware that as a result of ATRA, the SNF sector absorbed yet another substantial Medicare funding cut in a manner that disproportionately impacts skilled nursing, and comes on top of SNFs already absorbing $65 billion Medicare reductions over the next 10 years,” said Alan G. Rosenbloom, president of AQNHC. “Additionally, the therapy changes under ATRA disregard the crucial role SNFs play in providing the specialized care and therapy vital to patient rehabilitation, central to avoiding costly rehospitalizations.”

View the AQNHC press release.