Nursing Homes – It Is All About Case Mix

Based on latest filed Medicare cost reports, a little over 12 percent of all skilled nursing facility or “SNF” patients are Medicare recipients. This is excluding Medicare Advantage patients.  By comparison, over 57 percent of patient days were for Medicaid patients. 

It is critical to understand that Medicare pays two to three times more Medicaid per patient day for patients in SNFs. 

A SNF that has the same overall census will often go bankrupt if the percentage of Medicare patients shifts and the SNF fills empty beds with Medicaid patients. 

I worked with a SNF chain a few years back.  For many internal reasons, the number of Medicare patients fell and the SNF administrators filled the beds with Medicaid patients.  On paper, the patient census remained constant, but the chain teetered on bankruptcy.

In the current COVID0-19 world, I worry that the Medicare SNF patients will plummet as patients forgo knee and hip replacement surgery and avoid going to the acute care hospital for procedures that drive cardiac procedures requiring rehabilitation services. 

From a numbers prospective, Medicare cost report filing requirements have been delayed such that SNFs normally required to file in May now have until the end of August to file cost reports. 

I hope that SNFs can hold out that long.  In the interim, we can push to have Medicare raise reimbursement rates.  The fall in Medicare census resulting from COVID-19 could allow Medicare to make emergency rate increases while not driving up total payments to SNFs. 

Compounding these problems, we have an election looming and politicians usually like to wait to avoid fallout from proposing regulations.  I hope SNFs can hold out that long.   


Timothy Powell, CPA

Timothy Powell is a nationally recognized expert on regulatory matters, including the False Claims Act, Zone Program Integrity Contractor (ZPIC) audits, and U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) compliance. He is a member of the RACmonitor editorial board and a national correspondent for Monitor Mondays.

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