MedPAC Opposes Payment Increases for SNFs and Urges Push for Payment Reform

June 10, 2016
Policy Snapshot

The Medicare Payment Advisory Commission (MedPAC) issued a letter on May 25, 2016, commenting on the Centers for Medicare & Medicaid Services’ (CMS) proposed rule relating to payment updates for skilled nursing facilities (SNFs). The letter, entitled “Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2017, SNF Value-Based Purchasing Program, SNF quality reporting, and SNF payment research,” includes comments on the following four areas: the proposed payment update, research on the design of a SNF prospective payment system (PPS), value-based purchasing, and quality reporting.

MedPAC opposes the proposal to increase Medicare payment rates for SNFs by 2.1 percent, which would increase payments to SNFs by almost $800 million in FY 2017. MedPAC states that they “understand that CMS is required by law to update the SNF PPS rates. However, after reviewing many factors—including indicators of beneficiary access, the volume of services, the supply of providers, and access to capital—the Commission determined that Medicare’s current level of payment appears more than adequate to accommodate cost growth.”

MedPAC also comments on the CMS proposal for reforming SNF PPS, which includes the creation of two technical expert panels that will address the therapy and nursing components of the payment model. MedPAC criticizes CMS for failing to address the shortcomings of the current SNF PPS and for failing to indicate a timeline for when reforms will be implemented.

Value-based purchasing (VBP) programs were supported by MedPAC stating that “the Commission supports VBP policies as a way to encourage providers to furnish high-value care to Medicare beneficiaries.” The Commission urged CMS to broaden the scope the VBP policy to include other post-acute care outcome measures.

MedPAC comments on the four measures proposed by CMS for adopting the SNF quality reporting program required by the IMPACT Act of 2014, they include: drug regimen review with follow-up, the resource use measure, discharge to community, and potentially preventable readmissions within 30 days after discharge from the SNF. MedPAC urges CMS to move towards the reporting of cross-cutting quality measures for all providers in each setting in order to promote transparency for beneficiaries and competition across providers. MedPAC has provided similar commentary with respect to the opposition of payment increases for hospices and inpatient rehabilitation facilities.