MedPAC Calls For Cancellation Of Medicare Pay Raise For Nursing Homes

In a proposed rule published in the April 20 Federal Register, CMS said it is seeking a 1.4% net hike in the nursing home Medicare payment rate. The rate increase would reflect a market basket increase of 2.6% and two deductions, including a 0.6% cut for productivity adjustment and a 0.6% cut as a forecast error adjustment. However, in a letter to CMS, MedPAC has said that it believes no update is warranted because “Medicare’s current level of payments appears more than adequate to accommodate cost growth, even before any update.”

MedPAC argues that the aggregate Medicare margin for freestanding nursing homes in 2013 was 13.1%, the 14th consecutive year it exceeded 10%. However, the American Health Care Association is now shooting back at MedPAC’s decision, claiming MedPAC’s own research shows that nursing homes operate at an overall margin of only 1.9%.

MedPAC is now calling for CMS to move toward value-based purchasing and quality reporting programs. Additionally, MedPAC has recommended that Congress eliminate the market basket update, revise the prospective payment system, and rebase payments beginning with a 4% reduction to the base rate.¬†Comments to CMS’ proposed rule are due on June 19.

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