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The Medicare Payment Advisory Commission plans to study whether fee-for-service payments for skilled nursing facilities and home health accurately reflect patients’ needs and care costs. Commissioners raised concerns about coding incentives, ownership structures and access, but the analysis is intended to identify trends—not prove that payment policies caused provider behavior.
The Medicare Payment Advisory Commission (MedPAC) plans to examine whether Medicare fee-for-service payments for skilled nursing facilities and home health reflect patients’ clinical complexity and providers’ costs, after commissioners raised concerns about coding accuracy, financial incentives and access to care. The review will analyze data from 2021 through 2025, with initial results expected in fall 2027.
At its October meeting, MedPAC discussed a research work plan covering the skilled nursing facility (SNF) and home health payment systems. Researchers will look at trends in coding, patient case mix, payment-to-cost relationships and patient selection. They will assess whether observed patterns appear consistent with payment incentives, while also considering facility specialization, ownership and workforce pressures.
Commissioner Scott Sarran urged researchers to examine the role of for-profit providers and complex ownership arrangements, including private equity involvement. He also cautioned against treating all differences in patient populations as evidence of financially motivated admissions. Medical advances and changing care needs can increase demand for post-acute rehabilitation, while some facilities have equipment or services that make them particularly suited to certain patients.
Commissioner Kenny Kan raised the possibility that providers may use artificial intelligence to increase coding intensity or reported patient complexity. He asked researchers to consider ways to improve payment accuracy using existing claims and assessment data, rather than adding documentation or compliance work for providers. MedPAC researcher Brian Klein-Qiu said the work is designed to identify trends, not establish that payment reforms caused changes in coding, selection or provider conduct.
Payment Signals and Patient Access
The review could help policymakers assess whether Medicare’s payment methods accurately account for the needs and costs of patients receiving skilled nursing and home health care. If payments do not reflect those factors, the resulting incentives could affect provider finances and potentially influence which patients facilities admit. Those are questions for the planned analysis, not findings already established.
Access is a central concern. Researchers have heard concerns that SNFs may be reluctant to accept some high-cost patients. The study will examine whether potentially unprofitable cases are spread across facilities or concentrated in particular providers. It will also consider whether payment-to-cost patterns are associated with facility closures or fewer available beds, which could bear on patients’ options for post-acute care.
Commissioners stressed that patient mix alone cannot show whether admissions are appropriate. A facility with on-site dialysis may care for more dialysis patients, for example, while a provider with bariatric equipment may be better prepared to treat patients with obesity. Researchers will need to distinguish such clinical specialization from selection associated with financial incentives.
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How MedPAC Will Read the Data
MedPAC is a nonpartisan advisory body that analyzes Medicare payment policy and makes recommendations to Congress and the U.S. Department of Health and Human Services. Its role is to advise on payment accuracy, access, care quality and the long-term sustainability of the program; it does not itself set Medicare payment policy.
The planned work will compare patterns across providers and payment categories, with commissioners calling for analysis of for-profit and nonprofit facilities and variation in costs within payment classification groups. Commissioner Cheryl Damberg said the researchers should account for historical differences between provider types and for selection patterns that predate newer payment models. Researchers will also consider whether high-cost cases are concentrated at particular facilities.
Those comparisons will require care: ownership, local provider arrangements, specialization and staffing pressures may help explain observed differences. The review therefore aims to assess whether patterns are consistent with payment incentives, not to assign a cause based on a difference in claims data alone.
““Most especially nursing facilities, have become increasingly for profit in a variety of Byzantine ownership arrangements – and many of them characterized by private equity injected somewhere in the mix.””
— MedPAC Commissioner Scott Sarran
What the Study Cannot Yet Show
No results or conclusions from the planned analysis were reported at the meeting. It remains unclear whether the data will show coding patterns, payment-to-cost differences or patient selection consistent with financial incentives, and whether any such patterns will differ by ownership type or payment category.
The study also will not, by itself, establish that Medicare payment rules caused a particular provider’s coding or admission decisions. Differences in patient mix may reflect legitimate clinical specialization, and the planned work must account for that and other factors. Commissioners raised concerns about AI-assisted coding and private equity involvement, but the source material does not establish how widespread either practice is or demonstrate that either has caused inaccurate payments.
Researchers are also considering how to compare fee-for-service Medicare and Medicare Advantage. The scope and findings of that comparison, and whether the work will identify any effect on closures or bed availability, remain unsettled.
Results Expected in Fall 2027
Researchers are expected to analyze claims and assessment information for 2021–2025 and present initial results in fall 2027. The work will assess coding, case mix, costs, patient selection and relevant provider characteristics, with attention to how access and specialization may affect interpretation.
MedPAC can use its analysis to develop advice for Congress and HHS, but the discussion at the October meeting was a research-planning step, not an adopted payment change. Whether the commission will recommend policy revisions will depend on what the analysis finds and how its conclusions are weighed against access, quality and program costs.
Key Questions
What is MedPAC planning to study?
MedPAC plans to assess whether Medicare fee-for-service payments for skilled nursing facilities and home health accurately reflect patients’ clinical complexity and the costs of care. The work will examine coding, case mix, payment-to-cost relationships and patient selection.
Has MedPAC found that nursing homes are manipulating coding?
No. Commissioners raised concerns about coding incentives and possible AI use, but the analysis has not yet produced findings. The planned study is intended to identify trends, not establish that payment policies caused coding changes or inappropriate behavior.
When will the analysis cover, and when are results expected?
The research will examine data from 2021 through 2025. Initial results are expected in fall 2027.
Will the study determine whether facilities avoid high-cost patients?
Researchers plan to examine whether potentially unprofitable cases are distributed across facilities or concentrated in particular providers. However, differences in admissions may reflect clinical specialization or local circumstances, so patient mix alone will not establish inappropriate selection.
Could this lead to Medicare payment changes?
MedPAC advises Congress and HHS on Medicare policy, so its findings could inform future recommendations. No payment change was announced at the meeting; any recommendation would depend on the analysis and subsequent policy decisions.
Source: rss
