It’s Time for an Equal Paying Field

In the last year, Congress has successfully collaborated to address some important fiscal issues. In late 2013, lawmakers passed a federal budget through October 2015. The federal debt ceiling and the annual “doc fix” have been patched and will not need attention again until the spring of 2015.  However, all of these compromises offer only short-term resolutions; meanwhile, our federal debt continues to climb and significantly outpace economic growth. With important fiscal deadlines further down the road, now is the time for Congress to entertain sensible solutions to address our nation’s long-term, complex fiscal issues.  America’s skilled nursing care centers have just the solution to help reduce federal spending on one of the government’s biggest ticket items – Medicare.

In 2012, post-acute care for seniors cost Medicare $62 billion and accounted for 17 percent of fee-for-service spending. Currently, Medicare is setup to cover a beneficiary’s post-acute care based on where they receive care instead of the patient’s specific care needs and their personal characteristics. As a result, patients with similar clinical profiles may be treated in different settings, but at different costs to Medicare. Such misalignment has been understood and acknowledged by policymakers for a very long time. A new study provides even more credible information to back up this assumption.

At a public meeting this past March, the Medicare Payment Advisory Committee (MedPAC), a non-partisan group which advises Congress on Medicare policy, provided its own analysis on patients served in skilled nursing facilities (SNFs) and inpatient rehabilitation facilities (IRFs). The Commission examined three specific conditions: stroke, major joint replacement and hip fractures, and they found that patients with these select conditions admitted to SNFs and IRFs in the same market had similar characteristics. What’s more, health outcomes for patients in both settings were basically the same. Yet, IRFs generally received higher payments than SNFs for these similar patients. Medicare paid an IRF $5,000 more for a stroke patient’s stay compared to a SNF and $4,000 more for a major joint replacement.

As the largest association representing long term and post-acute care providers in the country, the American Health Care Association is offering a solution to this growing problem. We strongly support a site-neutral payment system for post-acute care which would restructure Medicare to revolve around the beneficiaries’ needs, rather than around the settings where care is delivered. Under AHCA’s solution, patients would be grouped by their clinical condition and severity of illness. Each group would have a set Medicare payment that would cover the expected costs of providing the appropriate type, duration and mix of services. That Medicare payment would be the same for each post-acute care provider regardless of where the patient is being treated.

This person-centered approach to post-acute care would level the “paying” field to motivate providers to offer the highest quality option in order to continue receiving patients. Additionally, a site-neutral payment system would further care coordination and collaboration between providers. Such incentives are beneficial for seniors who would receive better care as well as taxpayers who would enjoy a more cost-effective Medicare system. AHCA’s site-neutral approach of balancing post-acute care payments and increasing efficiencies could save Medicare as much as $20 billion over the next 10 years.

Fortunately, we are not alone in this thinking. Over the past few years, momentum for site-neutral policies has been building in Washington. Along with MedPAC continuing to explore a site-neutral payment system between IRFs and SNFs, a 2013 report by the Moment of Truth Project included the co-chairs, Erskine Bowles and Senator Alan Simpson proposing reforms in post-acute care payments as well as a proposal to equalize payments across post-acute care settings. President Obama’s fiscal year 2014 budget also proposed a restructure of post-acute care payments for three conditions, involving hip and knee replacements and hip fractures as well as other conditions to be selected by the Secretary of Health and Human Services. These acknowledgements by the Administration and non-partisan groups reflect the growing need to address this issue and implement a site-neutral payment policy.

While we as a nation struggle to comprehend how we can prevent the looming Medicare solvency crisis as 10,000 of our nation’s baby boomers turn 65 with each passing day, America’s skilled nursing care centers aren’t batting an eye. We are developing solutions that combat efficiency problems in our own backyard, and a site-neutral payment policy for post-acute care providers is a great place to start. This solution is not only better for the government and taxpayers, it is also better for your loved one who may suffer a stroke or a broken hip. We’re ready to address our nation’s fiscal issues and look forward to working with Congress to make it happen.


Mark Parkinson is the president and Chief Executive Officer of the American Health Care Association and the National Center for Assisted Living.

Morning Consult