Kaiser Family Foundation reports that spending for care in skilled nursing facilities (SNFs) by the traditional Medicare program increased by 4% during the coronavirus pandemic, although Medicare spending for most other services declined, and the number of Medicare beneficiaries in SNFs declined. As the result of higher spending per resident per day and residents’ longer lengths of stay, the Medicare program paid more for each beneficiary’s SNF stay and had higher overall spending for SNF care.
Medicare spending for skilled nursing facility care, 2018-2020
| Issue | 2018 | 2019 | 2020 |
| Number of Medicare beneficiaries | 1.6 million | 1.5 million | 1.3 million |
| Spending per day | $470 | $490 | $534 |
| Length of stay | 24.7 days | 24.7 days | 26.3 days |
| Spending per beneficiary | $16,228 | $16,670 | $19,304 |
| Total spending for SNF care | $25.3 billion | $24.9 billion | $26 billion |
Kaiser explains that three factors appear to have contributed to increased Medicare payments for SNF care – two waivers of statutory limitations in Medicare coverage, which were intended to keep hospital beds open and available, and the new Part A reimbursement system, Patient Driven Payment Model (PDPM), which went into effect October 1, 2019. Beneficiaries under age 65, although only 10% of beneficiaries in traditional Medicare, accounted for 26% of the increase in Medicare’s spending for SNF care.
Since March 2020, CMS has waived the three-day inpatient hospital stay requirement, which Kaiser calculates accounted for more than 15% of SNF stays in 2020. CMS also waived the 100-day limit in the SNF benefit period. In addition, PDPM has not been budget-neutral, as CMS intended, but has resulted in higher daily rates.
In the proposed annual update to Part A payments to skilled nursing facilities, CMS proposes recalibrating the rates to recapture the PDPM overpayments. The final rule is expected in August.
To read the Issue Brief, Jeannie Fuglestein Biniek, Juliette Cubanski, and Tricia Neuman, “Amid the COVID-19 Pandemic, Medicare Spending on Skilled Nursing Facilities Increased More than 4% Despite an Overall Decline in Utilization” (Jun. 1, 2022), go to https://www.kff.org/medicare/issue-brief/amid-the-covid-19-pandemic-medicare-spending-on-skilled-nursing-facilities-increased-more-than-4-despite-an-overall-decline-in-utilization/
June 9, 2022 – T. Edelman