Recently, the Medicare Payment Advisory Commission (MedPAC) released its March report on Medicare. MedPAC is an independent congressional agency that advises Congress on the Medicare program. The report includes information on Medicare spending, care quality, and makes recommendations. The report provides critical insight into Medicare spending when it comes to long-term care, including skilled nursing home care. MedPAC reported that in 2023, Medicare Fee for Service (FFS) paid nursing home providers $30 billion. FFS payments are direct payments made by Medicare to providers and do not include Medicare-managed care payments. MedPAC reported that the average Medicare FFS profit margin for freestanding nursing homes was 22% in 2023 and recommended that Medicare FFS payments be reduced by 3% for the fiscal year 2026.
In its report, MedPAC drew attention to the issue of related party transactions, stating that “the lack of transparency in reporting of third-party transactions and related entities makes it difficult to know if we are accurately assessing the finances of nursing facilities.” MedPAC cited a study released last year that found that 68% of actual profits to nursing homes were hidden in related party transactions. Consumer Voice has long called for increased transparency and accountability for these transactions, through which billions of Medicare and Medicaid dollars flow annually.
MedPAC also commented on the minimum staffing rule. Its analysis found that 30% of nursing homes would be exempt from at least one of the rule’s requirements, while 12% would be exempt from all requirements. The report found that exemptions in rural areas would be even more significant, with 69% of rural facilities being exempt from at least one of the requirements and 21% being exempt from all.
Other key findings from the report include:
- Medicaid FFS spending was $42.5 billion in 2023.
- Providers’ access to capital remains adequate, and 2024 saw a significant increase in nursing home transactions, indicating a strong market.
- Care quality measures, specifically preventable hospital readmissions after discharge, successful discharges to the community, and some staffing measures, remained the same.
- Nursing home occupancy rates have mostly recovered to pre-pandemic levels.
