Washington Update: Monday, January 9, 2023

Kevin McCarthy elected US House Speaker on 15th Ballot.

Republican leader Kevin McCarthy became the 55th Speaker of the House early Saturday morning, overcoming a fierce challenge to his leadership by a group of far-right members that led him to make steep concessions and suggests a contentious two years ahead. The worst part about the drama is that, for the past two months, Republicans have been unable to elect committee chairs and hire staff for the year ahead.

Who will chair the Ways & Means Committee?

For healthcare companies like Select Medical, one of the biggest Congressional questions is who will chair the Ways & Means Committee, which has jurisdiction over the Medicare hospital policy. The two main contenders are Rep. Vern Buchanan (R-FL) and Rep. Jason Smith (R-MO). Major issues this year will be the solvency of the Medicare trust fund and post-acute care policy.

Rep. Boyle will serve as senior Democrat on Budget Committee

Congressman Brendan Boyle of Philadelphia was recently elected as top Democrat with oversight of all things related to the U.S. Budget, including Medicare spending levels. Rep. Boyle has been a good ally of physical therapists and has supported legislation to avoid therapy cuts in Medicare Part B. Select Medical looks forward to working with the Congressman in his new role.

MedPAC commissioners criticize some post-acute payment rates.

Last month, the MedPAC commission met to review post-acute payment rates. Several commissioners criticized rates paid to home health and IRFs as obscenely high while SNF policy is a complete mess. MedPAC will meet again this week in Washington. MedPAC is a Congressional advisory panel which works with CMS and private sector stakeholders. An article from Inside CMS is attached for those who would like additional detail.

Pennsylvania General Assembly elects new Speaker

With all the drama in Washington, state legislators in Harrisburg quietly and quickly work out a deal to elect a new state House speaker. The 2022 elections gave state Democrats a razor-thin majority of 102-101. To resolve the leadership issue, state Rep. Mark Rozzi from Berks County was elected Speaker. Even though he is a Democrat, he quit the Democratic party and will serve as an Independent during his speakership. This averted the potential for a long, drawn-out fight.

Select Medical continues partnership with NALTH

In 2022, Select Medical and NALTH formed the “LTCH Roundtable” a

collaborative effort to conduct market research and make policy recommendations regarding the LTCH hospital community. The Roundtable’s two whitepapers are available at www.nalth.org. Select Medical will continue to work with NALTH in the year ahead. The joint effort is powered by Lane Koenig, PhD and his team at KNG Health.

“Futures Project” explores options for CIRHs (LTCHs)

Select Medical’s Washington office is working with our national trade associations to develop new public policy for LTCHs. Since the passage of LTCH criteria ten years ago, the LTCH hospital community has shrunk considerably. And yet, the global pandemic demonstrated the need for high-acuity venues like LTCHs and the gaps in the continuum of care.  If you would like updates on this project, please email Chris Carey at CCCarey@SelectMedical.com

NEWSCLIPS

INSIDE CMS

December 12, 2022

MedPAC Proposes Set Of Pay Cuts For Post-Acute Care Sector

By Bridget Early

The Medicare Payment Advisory Commission laid out draft recommendations for the post-acute sector Friday (Dec. 9) that would cut pay rates for skilled nursing facilities, home health providers and inpatient rehabilitation facilities, all of which had high margins that some commissioners called “obscene.”

The commission’s deliberations come as home health stakeholders worry about impending pay cuts in the 2023 physician fee schedule, which are expected to kick in next year if Congress doesn’t include additional funding in the year-end omnibus.

MedPAC’s vote on the proposed pay cuts will fall shortly before the one-year anniversary of President Joe Biden’s comprehensive, controversial agenda for the nursing home sector, which among other things called on CMS to beef up oversight and enforcement actions for facilities that fail to meet minimum staffing requirements and violate health and safety protocols.

Following is a rundown of MedPAC’s draft recommendation:

Nursing homes. Commissioners supported a draft recommendation to cut SNF base payment rates by 3% for 2024. Commissioner David Grabowski said the nursing home sector is likely going to face a crossroads when the public health emergency ends. Grabowski said the structure of the current system -- with Medicaid paying a rate that is not commensurate with the cost of care -- will pose problems when the PHE does eventually end and emergency COVID-19 funding dries up.

“This way of paying or supporting nursing home care in this country is completely broken,” Grabowski said. “[Chernew] said it well: From a Medicare perspective it's quite healthy, but from an industry perspective this is a flawed model with overpaying with one public payer and underpaying with another and hoping for the best.”

Grabowski added that the commission should consider tracking SNF closures -- which the nursing home lobby has warned could flare without additional funding -- as an important metric of the sector’s health moving forward.

SNFs took a 5% cut last year after commissioners determined a new case mix system and high payments meant nursing homes receiving Medicare funding demonstrated improved financial performance. This year’s 3% cuts would continue to balance out the sector’s high margins, which rang in at 17.2%, staffers said.

Commissioners Betty Rambur and Larry Casalino said the commission should also be wary of cross-subsidizing Medicaid or other payers, which Rambur added hinders comprehensive reforms in the sector.

Home health. For 2024, commissioners supported a draft recommendation to cut base payment rates by 7% for home health facilities after staffers noted home health facilities’ margins hovered around 25% for 2021.

The home health sector’s margins hit 24.9% in 2021, up 5% from 2020, according to MedPAC staffers. Grabowski and several other commissioners echoed sentiments from last year that the margins were absurdly high.

"I'm just gonna be very blunt: A 24.9% Medicare margin is obscene,” Grabowski said. "A 7% cut I think is very much warranted -- this will not harm beneficiary quality or access here.”

Commissioner Stacie Dusetzina said she was worried about the access and quality data staffers were using to come up with a recommendation, a concern several commissioners echoed. Dusetzina said the commission should consider establishing a more detailed look at available care: Reasonable numbers of HHAs in a particular area is a good sign, but whether facilities in a particular area have the bandwidth to take on new patients is a much more thorough metric, she said.

Grabowski and Rambur pointed out that ongoing workforce issues are a major factor for the commission to keep in mind, though Grabowski raised doubts about the sector’s inability to raise workers’ wages given high margins.

“We've seen wage data suggesting nursing homes have increased wages -- maybe not commensurate with the needs there -- but I'm less clear why home health agencies haven't been able to adjust,” Grabowski said. “I know that there just aren't workers in some markets like rural areas and others, but I would have expected just based on the data to see a greater increase in home health aide wages.”

Rehab facilities. Commissioners supported a draft recommendation to cut base payment rates for inpatient rehabilitation facilities by 3% for 2024, but several raised concerns that the cut should be significantly higher given the sector’s average margins -- 17% for 2021.

Casalino, who was echoed by Rambur and two other commissioners, Robert Cherry and Marge Ginsburg, argued MedPAC could make a much deeper cut given the sector’s margins. IRFs received a 5% cut last year based on a similar rationale.

But Commissioner Greg Poulsen pointed out that a significant difference in margins between hospital IRFs -- which hovered at about 5% -- and freestanding private equity IRFs -- which hit 25% for the year -- would make it challenging to increase cuts without decimating hospital IRFs. Hospital IRFs make up about 75% of all IRFs, and treat around half of all IRF patients, according to MedPAC staffers; Poulsen said making higher cuts would put many hospital IRFs out of operation.

Casalino said the commission should consider taking a closer look at the gap in future sessions, and potentially decouple hospital IRF reimbursement policies from those of freestanding IRFs to help level out margins with more targeted reimbursement rates.

Grabowski added the commission could potentially consider pursuing site-neutral payment options for IRFs during a future session. –