Medicare SNF spending rises 4.4% despite lowest number of beneficiaries in a decade
Skilled nursing was one of three healthcare sectors to see an increase in Medicare spending, while overall spending for 32 million Medicare beneficiaries fell in 2020.
An analysis conducted by the Kaiser Family Foundation confirmed that SNF spending increased by 4.4%, an increase of $1.1 billion between 2019 and 2020, despite a decline in usage; about 200,000 fewer Medicare beneficiaries were using SNF services in 2020, according to KFF analysis.
Hospice and Medicare Part B also saw an increase in spending, according to the analysis.
The number of traditional Medicare beneficiaries using SNFs has declined by a third over the past decade to 1.3 million enrollees in 2020 – the lowest number of Medicare SNF users in a decade.
Yet recipients who chose to go to an SNF cost $2,724, or 16.3% more in 2020 compared to 2019. This is explained by an increase in spending per day of $44 and an increase in the average length of stay of 1.6 days, according to KFF researchers. found.
The KFF expects SNF spending among Medicare beneficiaries to continue, but at a slower pace as public health emergency (PHE) waivers expire. “Small year-over-year increases” are expected through the end of the decade.
KFF researchers attribute the increase in part to a change in payment models – the Patient-Oriented Payment Model (PDPM) was introduced to beneficiaries in October 2019. The Centers for Medicare & Medicaid Services (CMS) have sought to keep the new model budget neutral, but ended up increasing payments by 5%, or $1.7 billion, in 2020.
The agency’s proposed rule currently includes a 4.6% reduction in the PDPM to curb rising spending.
Longer and more expensive stays also contributed to the increase. Most people avoided or were unable to undergo surgeries that would require rehabilitation in the early months of the pandemic, leading to more intensive care needs later in the year that could not be met in other other contexts, depending on the analysis.
Waiver of the three-day stay requirement for an SNF stay under Medicare also played a role, KFF researchers found, with more than 15% of SNF stays in 2020 covered by the PHE waiver.
“The patient mix also likely changed, as Medicare beneficiaries with COVID-19 were 66% more likely to be discharged from the hospital to an SNF than non-COVID patients,” the authors noted.
The KFF said Medicare beneficiaries under age 65, who make up less than 10% of those using SNF services, accounted for a “disproportionate” share of Medicare skilled nursing spending between 2019 and 2020.
“This group accounted for 26% of the increase in SNF expenditure between 2019 and 2020. Indeed, the average length of stay and expenditure per day for these beneficiaries increased more than for beneficiaries aged 65 and over” , explained the KFF researchers.
Medicare beneficiaries younger than 65 stayed about two days longer than before 2019, while those 65 and older stayed 0.9 days longer.
Coupled with the three-day stay, CMS removed the 100-day benefit period for people with Covid-19, meaning Medicare beneficiaries recovering from the virus could renew their SNF benefits for an additional 100 days of care. .
“This may have contributed to the longer average length of stay,” KFF added in its analysis. “Additionally, it is possible that COVID-positive patients have chosen to stay longer in an SNF instead of returning home and potentially infecting family members.
Nor would operators have had a strong incentive to send patients home, given Medicare’s high markups for SNF.
The increase in spending follows a gradual decline in spending on SNF services since 2012 due to productivity adjustments in the Affordable Care Act, KFF said. The expansion of the Responsible Care Organization (ACO) since 2012 further reduced SNF expenses before the pandemic.