CMS should revise therapy payments: report

If the Centers for Medicare & Medicaid Services (CMS) paid skilled nursing facilities (SNFs) for therapy services based on beneficiary characteristics and established a separate payment component for nontherapy ancillary services, then payments would more accurately reflect services offered and SNFs would be less likely to “furnish therapy for financial gain,” say the writers of a recent report [PDF] produced by the Medicare Payment Advisory Commission (MedPAC) and the Urban Institute.

“CMS should adopt an alternative design as quickly as possible,”  say authors Carol Carter, PhD, Bowen Garrett, PhD, and Doug Wissoker, PhD.

Currently, CMS pays SNFs for therapy services based on the amount of therapy provided rather than recipient need, according to the report authors, who add that this approach means that SNFs generally are overpaid for the therapy services they provide. Because payments for nontherapy ancillary services do not vary with the costs of such services or a beneficiary’s need for them, the authors write, SNFs currently have “incentives to shift their patient mix toward intensive therapy case-mix groups by providing unnecessary therapy services.”

Carter is a principal policy analyst for MedPAC. Garrett is a senior fellow at the Urban Institute’s Health Policy Center. Wissoker is a senior fellow at the Urban Institute’s Statistical Methods Group.