News, Skilled Nursing Facility

MedPAC makes recommendation that RCS-1 replace PPS in FY19

In their November meeting, the Medicare Payment Advisory Commission (MedPAC) discussed a way to increase the equity of payments within each post-acute care (PAC) setting before implementing a unified payment system by using a blend of the setting-specific and PAC PPS relative weights to establish payments in each setting. On Thursday, December 7, MedPAC official Carol Carter announced that there was broad support for this idea.

Carter provided a sketch of the SNF industry in 2016, explaining that there were about 15,000 providers and approximately 1.6 million fee-for-service (FFS) beneficiaries. Program spending reached about $29 billion, and FFS Medicare makes up about 11% of days at the average facility, but 20% of revenues. Carter emphasized that the trends and takeaway points from this data have not changed from last year: Medicare payments are high compared with the cost of care, and the payment system still needs to change.

As a result of this conclusion, MedPAC announced their draft recommendation, which proposed that Congress:

  • Eliminate the market basket update for SNFs for fiscal years 2019 and 2010
  • Direct the Secretary to implement a redesigned PPS in FY19 (e.g., the proposed Resident Classification System Version 1 [RCS-1])
  • Direct the Secretary to report to Congress on the impacts of the revised PPS and make any additional adjustments to payments needed to more closely align payments with the costs in FY2021