The Obama administration's fiscal year 2015 budget request aims to achieve savings by aligning Medicare payments for the same sets of post-acute care services across different locations, as well as by reducing payment increases for certain post-acute care providers. If this sounds familiar, it should. Many of the Medicare proposals are the same as last year. But with many Republicans calling the budget “dead on arrival,” whether any of the proposals will become law is debatable.
Among other ideas, the budget proposed to equalize payments for the same conditions commonly treated in inpatient rehabilitation facilities (IRFs), and skilled nursing facilities (SNFs). The administration's proposal would reduce IRF payments for care for hip and knee replacements, hip fractures and certain pulmonary diseases. Medicare pays significantly more for those conditions in IRFs than it does in SNFs.
Sarah Snyder, manager at Avalere Health, told me that even though the majority of the proposals are the same, one important difference between last year and this year’s budget requests is that the SNF cuts are much more aggressive, especially compared to other providers. The budget proposal would reduce payments for IRFs, long-term care hospitals and home health agencies by 1.1 percent in 2015 through 2024. SNFs however, will see payments cut by 2.5 percent in FY 2015, tapering down to 0.97 percent in FY 2022.
According to Snyder, the majority of the proposed savings to Medicare would come from provisions related to bad debt and Graduate Medical Education, Snyder said. Starting in 2015, the budget proposal would reduce bad debt payments to 25 percent over three years for all providers that receive bad-debt payments. The proposal would align more closely Medicare policy with private payers, which don't typically reimburse for bad debt.
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