Growing Medicare Advantage penetration hasn’t significantly affected margins in skilled nursing or other post-acute care sectors, staff from a congressional advisory commission said Thursday.
Analysts with the Medicare Payment Advisory Commission shared their findings as commission members debated how best to shape future payment policy given that fewer than half of all beneficiaries are now covered by traditional Medicare.
Their research tied a 10 percentage point increase in market penetration to a 0.1 percentage point reduction in skilled nursing facility’s all-payer margins, a 0.6% drop in their all-payer revenues and a 0.6% drop in their all-payer facility days.
Those findings are much less dramatic than 2024 results from the Johns Hopkins Bloomberg School of Public Health. Examining SNF cost reports and county-level penetration data, researchers there reported a 10 percentage point increase in MA enrollment was associated with a $213,883 decrease in revenue and a 0.59 percentage point decrease in profit margin. That team warned of “substantial” declines and said the continued growth of MA “may result in significant changes in the SNF industry.”
But on Thursday, MedPAC analysts told commissioners the decrease in all-payer margin was not “statistically significant.” They did, however, categorize the average decrease in revenues and an average 0.05% decrease in costs as “small” but significant.
Home health agencies, meanwhile, faced a 2.7% drop in all-payer revenues given the same 10 percentage point growth in MA penetration. Staff said could be related to the fact that MA makes up a larger share of home health use.
MA plans are known for limiting their use of inpatient rehab and skilled nursing facilities, opting for lower cost post-acute services, or none at all. Other data presented Thursday showed MA plans also drove increased length-of-stay among hospitalized patients, increasing acute stays by nearly 20% when eventually discharged to a skilled nursing and by more than 32% when discharging to an inpatient rehab.
The review, to be presented as an informational chapter in a report to Congress in June, also included feedback from interviews with stakeholders. Hospitals repeatedly claimed in their conversations with MedPAC staff that they have greater difficulty discharging MA beneficiaries to post-acute care and face increased administrative and other costs associated with their care.
Post-acute providers, meanwhile, complained of denied care, shortened stays, the unwillingness of some plans to negotiate contracts and low rates.
MedPAC must balance those concern as it tries to protect the Medicare fund and maintain the stability of the post-acute sector.
“The goal of Medicare is not to ensure provider profitability,” said Principal Policy Analyst Brian O’Donnell. “At the same time, it’s important to understand whether the growth in MA affects provider finances, as beneficiary access to care depends on an adequate supply of providers.”
Commissioners in their comments grappled with whether the data was uniform across markets or SNF size, with some asking for additional examination that goes deeper than county-level measures for the hyper-local nursing home sector. Others asked staff if they could further examine the effects of MA on finances in small vs. large skilled nursing facilities to look for additional patterns or variations.
But no matter the financial findings or possible cost-savings netted by utilization management, some commissioners pointed to the challenges and opportunities that remain with MA.
“MA is delivering care more efficiently by managing utilization, negotiating prices and encouraging care in the most appropriate setting. However, let’s be honest: It’s not perfect,” said commissioner Kenny Kan, vice president and chief actuary of Horizon Blue Cross Blue Shield. “Many providers are dealing with friction. They’re dealing wth prior auth delays, higher administrative burden, and payment uncertainty.”
But Kan said he saw those as operational challenges, not a reason to reject the entire experiment.
“We can fix them without walking away from a model that is clearly delivering value. … I believe that the right approach is to make MA work better,” he added. “We can preserve what’s working in MA: competition, innovation and cost discipline while addressing legitimate provider concerns.”