The Medicare Payment Advisory Commission (MedPac) struck the wrong note with the nation’s leading provider group, the American Health Care Association (AHCA), when it presented at its recent meeting this month an updated draft recommendation to Congress. While the phrasing may have changed, the melody of the recommendation remained the same: the agency is asking to freeze future increases to Medicare payment rates for skilled nursing facility (SNF) providers.

The delicate dance between MedPAC and AHCA over this issue has been ongoing for many years. The agency leads with a recommendation that focuses almost exclusively on Medicare fee-for-service (FFS) margins. AHCA then follows in opposition, claiming that the numbers are not all that they seem, and typically wins.  

This year, Commission staff noted that 2014 Medicare margins were 12.5 percent—the fifteenth year SNF Medicare margins have been above 10 percent. Non-Medicare 2014 margins and total (Medicare and Medicaid) margins offset these gains at -1.4 percent and 1.9 percent, respectively.

Further comments from the Commission staff include that: 

• Broad SNF prospective payment system (PPS) challenges (therapy and non-therapy ancillary services overpayments) remain;
  
• ​PPS continues to favor therapy over medically complex care;
• The level of Medicare's payments remains too high; and 
• Wide variation in margins reflects patient selection, service provision, and cost control.

The Commission recommended revising PPS to address these challenges and then to rebase the "level of payments to help protect low-margin SNFs."

AHCA President and Chief Executive Officer Mark Parkinson issued a statement that opposed MedPAC’s recommendation.

“Policymakers must appreciate the additional financial challenges providers face given the rise of managed care, alternative payment methods, Medicaid shortfalls, and continued regulatory burdens,” said Parkinson. “Elected officials need the benefit of knowing Medicare Advantage plans, Accountable Care Organizations, and CMS demonstrations such as the new Comprehensive Care Joint Replacement rule will only continue eroding overall payment.”