Lawmakers leery of proposed Medicare cuts

The Medicare Payment Advisory Commission last week argued that the federal government could have saved $11 billion by now if it had heeded repeated proposals to cut or freeze payments to skilled-nursing facilities, inpatient rehabilitation centers, long-term acute-care hospitals and home health agencies.

“Constraining unit prices could create pressure on providers to control their own costs and be more receptive to new payment methods and delivery reform systems,” MedPAC Executive Director Mark Miller told a House Ways and Means subcommittee, suggesting that profits off of Medicare patients are excessive. Home health agencies and skilled-nursing facilities see profits exceed 15% on average and have for a decade, he added.

Miller’s remarks got a cool reception. Rep. Peter Roskam (R-Ill.) said an inpatient rehab facility in his district is a crown jewel, and that officials there have told him their overall margin is only 3.6%, and they lose 20 cents on the dollar on Medicare patients. Miller reassured him that there would be extra payments to the outlier pool to make up for ratcheting down the rate across the sector.

MedPAC has asked Congress to cut Medicare payments to home health agencies and inpatient rehab facilities by 5% as well as freeze payments to skilled-nursing facilities for two years during payment reform.

MedPAC does recommend rate increases for some categories, notably, 1.85% for hospitals. Miller testified that it is “imperative” for Medicare to restrain payment rates for hospitals.