Medicare crunch time with Trump administration?

Congress and the new administration face the daunting task of reigning in Medicare spending, and the long-term care industry can expect intensified attention to what may be considered avoidable hospital admissions from skilled nursing facilities (SNF).

According to analysts at the Medicare Payment Advisory Commission (MedPAC), the price tag for SNF spending associated with potentially avoidable hospital admissions may be between $2 to $3 billion annually, representing between 7 and 10 percent of all SNF spending by Medicare.

The estimate came from MedPAC senior analyst Stephanie Cameron’s presentation at the October advisory commission meeting.

They found just over 200,000 potentially avoidable hospital admissions per year, Cameron told commission members. That’s about 46 percent of all hospital admissions for this population.

Cameron estimates these hospital admissions cost about $1.4 billion in 2014, excluding additional spending on SNF care following a hospitalization or clinician billing during the hospital stay. That tab for provider billings during a potentially avoidable hospital stay runs upwards of $200 million per year.

Further, Cameron estimated just under 500,000 combined emergency department (ED) visits and observation stays in 2014 cost about $300 million. Spending on hospital use for potentially avoidable hospital admissions, ED visits and observation stays totaled about $1.7 billion during 2014.

She pointed out that “to the extent that potentially avoidable hospital admissions occur, the Medicare program is responsible for that spending.”

Potential Action

Cameron suggested MedPAC consider recommending Congress incorporates measures developed for long-stay nursing facility residents into the SNF quality reporting program or in the SNF value-based purchasing program (VBP). Facilities will begin publicly reporting an all-cause, all-condition measure in October 2017. Payment adjustments under the VBP program will start in October 2018.

Explaining the term “potentially avoidable” when used in this context, Cameron said, “Existing literature has shown that a substantial portion of hospital admissions of long-stay nursing facility residents may be avoidable through better prevention or management by the nursing facility.”

Transferring these residents to a hospital for conditions that could have been prevented exposes beneficiaries to health risks and unnecessarily increases Medicare spending, she stressed. In response, MedPAC staff created a measure of potentially avoidable hospital admissions based on 20 categories of conditions “we reasonably expect to be managed or prevented in a nursing facility with high quality care,” Cameron said.

Facilities with high rates of such admissions, she said, could adopt proven best practices, including increased use of physicians and other health professionals and providing ancillary services, such as on-site lab services and X-rays, which are available in about 80 percent of facilities.

Key Factors

She pointed out that in 2014 the MedPAC research team found a disproportionate share of urban facilities was among the best performers, while a disproportionate share of rural facilities had some of the worst records. Moreover, the team found facilities with 100 or fewer beds generally were more likely to be among the worst performers.

Cameron said facilities with the highest portion of hospice days or access to on-site X-ray services had lower rates of potentially avoidable hospital use, while facilities with the highest use of licensed practical nurses and the lowest frequency of visits from physicians or other health professionals had higher rates.

She acknowledged differences in individual state policies can affect a facility’s rate of potentially avoidable hospital admissions. “Many factors may contribute to this state-level variation, including staff requirements, culture regarding end-of-life care and other state-level policies.”

What’s Ahead

Regardless, the long-term care industry should expect increased attention from policymakers as they are forced to confront the fact that, according to the latest estimates, the program’s trust fund is projected to run dry by 2028, two years earlier than previous estimates.

“Medicare faces a substantial long-term shortfall that needs to be addressed,” Treasury Secretary Jack Law said in June.

Unfortunately, the program’s financial picture is worsening despite recent efforts at reform and crack down on fraud and abuse. Overall, $2 to $3 billion in potentially avoidable spending may seem like chump change when the overall price tag for Medicare is nearly $673 billion, but as MedPAC chair Francis “Jay” Crosson, MD, said that “seems like real money.”

A quick Google search for “Medicare financial crisis” returns articles going back more than a decade. It’s a problem Congress has fiddled with around the edges but has not really addressed in a substantive way—at least not in a way that will solve the impending crisis.

Robert Gatty has more than 40 years of experience in journalism, politics and business communications and is the founder and president of G-Net Strategic Communications based in Myrtle Beach, South Carolina. He can be reached at

Topics: Articles , Executive Leadership , Medicare/Medicaid , Regulatory Compliance