The findings published in a new Congressional Budget Office background paper, The Impact of Medicare’s Payment Rates on the Volume of Services Provided by Skilled Nursing Facilities, imply that an increase in payment rates will lead to a somewhat larger percentage increase in Medicare’s spending on skilled nursing facilities.
The report details how the volume of Medicare-covered skilled nursing facility (SNF) services adjusts in response to changes in Medicare’s SNF payment rates. The payment rate equals the payment received by a medical provider in exchange for providing a single unit of medical service; that rate comprises payments both from Medicare and from the patient. Although Medicare’s payment rates for SNFs have been changed repeatedly over the past decade, beneficiaries’ coinsurance for SNF care and other factors that affect the demand for that care have remained relatively stable. The volume response measured in this paper, therefore, reflects mainly a supply-driven phenomenon.
