On July 27, 2012, CMS issued the notice for the Skilled Nursing Facility (SNF) Prospective Payment System (PPS) FY 2013 update: Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2013. The final rule provides for an increase of 1.8% to SNFs for Part A beginning October 1, 2012. However, Medicare sequestration cuts of 2% are required under the Budget Control Act. The White House must issue a report to Congress within the next 30 days with details on the 2% sequestration cut to Medicare required under the Budget Control Act. The report must provide more detail as to how nursing home providers will be affected. Congress can replace the Administration’s plan with one of their own. A recent report released by The Alliance for Quality Nursing Home Care, a skilled nursing facility trade group, states the recently announced 1.8% Medicare payment increase to skilled nursing facilities will essentially be negated by the Medicare cuts associated with the “bad debt” provision in the Middle Class Tax Relief and Job Creation Act of 2012 and the $782 million sequester cut (scheduled to take effect January 1st if no action by Congress).
In addition, the report shows that, due to regulatory and legislative changes affecting the payment policies for skilled nursing facilities, nursing homes across the U.S. will lose about $65 billion in Medicare reimbursement over the next ten years. Of that total, nursing homes face about $34 billion in annual productivity adjustments under the Affordable Care Act, another $3 billion in reductions to bad debt payments and about $28 billion from regulatory changes and the sequester. For 2013-2014 the reductions will be nearly $4 billion and the estimated hardest hit states by the SNF Medicare funding cuts and regulatory changes are Florida, California, Texas, Illinois, New York, Pennsylvania, Ohio, New Jersey, Michigan, and Indiana.