MedPAC Recommends Cut for SNF Medicare Rates

Mary Madison, RN, RAC-CT, CDP
Clinical Consultant – Briggs Healthcare®

MedPAC (Medicare Payment Advisor Commission), in its March 2018 report to Congress, recommends “no payment update in 2019 for four FFS payment systems (long-term care hospital, hospice, ambulatory surgical center, and skilled nursing facility) and reductions of 5 percent of the base payment for the home health and inpatient rehabilitation facility (IRF) payment systems.” Additionally, it recommends “freezing skilled nursing facility payment rates for two years while the payment system is redesigned, then having the Secretary make any additional adjustments as needed.”

MedPAC further recommends that Congress:

  • eliminate the market basket update for skilled nursing facilities for fiscal years 2019 and 2020;
  • direct the Secretary to implement a redesigned prospective payment system (PPS) in fiscal year 2019 for skilled nursing facilities; and
  • direct the Secretary to report to the Congress on the impacts of the revised PPS and make any additional adjustments to payments needed to more closely align payments with costs in fiscal year 2021.

“More broadly, changes need to be made in the post-acute care payment systems (i.e., the skilled nursing facility, home health agency, IRF, and long-term care hospital payment systems), and the cost of inaction is mounting. Ideally, the post-acute care sectors would be brought together under a unified payment system that would base payments on patient characteristics. Such a system could both lower costs and ensure access for patients who may be financially less desirable under current payment systems. As an initial step, this year we recommend blending the relative weights in each of the setting-specific payment systems with those of the unified post-acute care system that we first described, pursuant to a Congressional mandate, in June of 2016.”


While all 16 chapters of this report are worth reading, skilled nursing facilities will definitely want to review Chapters 7 and 8 of this 563-page report.



Review and discussion of the current SNF PPS (prospective payment system) begins on page 209. RCS-1 is not mentioned by name but is referred to by the ANPRM (advance notice of proposed rulemaking) issued in 2017. “CMS’s work on alternative designs for the SNF PPS began 13 years ago in response to a legislative requirement (the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000) to conduct research on potential refinements of the SNF PPS (Liu et al. 2007, Maxwell et al. 2003, Urban Institute 2004). The design would redistribute payments from rehabilitation patients (especially those assigned to the highest rehabilitation case-mix groups) to medical patients, patients with high NTA costs, and patients requiring extensive services or wound care.”

The Medicare Payment Advisory Commission (MedPAC) is an independent congressional agency established by the Balanced Budget Act of 1997 (P.L. 105–33) to advise the U.S. Congress on issues affecting the Medicare program. In addition to advising the Congress on payments to health plans participating in the Medicare Advantage program and providers in Medicare’s traditional fee-for-service program, MedPAC is also tasked with analyzing access to care, quality of care, and other issues affecting Medicare. Two reports—issued in March and June each year—are the primary outlets for Commission recommendations.