Health Law & Business

Nursing Homes, Hospices in Line for Medicare Payment Increases

July 31, 2020, 9:59 PM

Nursing homes, hospice providers, and inpatient psychiatric facilities will all see payment increases of more than 2% next year under final Medicare payment rate increases announced Friday.

The nursing home industry, hard-hit by the Covid-19 outbreak, will see Medicare payments increase 2.2%, or $750 million. The Centers for Medicare & Medicaid Services had proposed a 2.3% rate hike that would have increased industry payments by $784 million.

The hospice industry will get an extra $540 million after the agency finalized a 2.4% rate increase. The agency had proposed a 2.6% increase that would have added $580 million in payments next year.

And Inpatient psychiatric facilities will see a 2.2% hike in Medicare payments next year. The CMS originally proposed a 2.6% rate hike that would have increased payments by $100 million.

In its March report to Congress, the Medicare Payment Advisory Commission recommended no rate increase for hospice providers in 2021 due to a history of substantial overpayments.

The commission also called for a 20% cut—from $29,995 to $23,996—in Medicare’s annual per-beneficiary payment limit for hospice providers. The reduction would have saved nearly $573 million, or 3.2%, of Medicare’s annual $17.9 billion in spending for end-of-life hospice care in 2017, the commission said.

But the CMS stuck to it’s original proposal and hiked the payment cap amount to roughly $30,684 in fiscal year 2021.

Medicare covers short-term nursing home stays following a hospital stay. In 2018, about 15,000 nursing homes provided 2.2 million Medicare-covered stays for 1.5 million beneficiaries in traditional Medicare. Medicare spending on nursing home care was $28.5 billion in 2018.

In October 2919, traditional Medicare switched to a new value-based payment system for nursing homes called the Patient Driven Payment Model. It bases reimbursements more on patients’ medical characteristics rather than the amount of therapy provided.

The payment model is expected to improve the accuracy and appropriateness of nursing home payments while also reducing administrative burdens for the facilities.

To contact the reporter on this story: Tony Pugh in Washington at tpugh@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Brent Bierman at bbierman@bloomberglaw.com

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