Insights^

On April 1, the Centers for Medicare and Medicaid Services (CMS) released their proposed Inpatient Hospital Prospect Payment System rule for FY 2026. The proposed changes are a mixed bag for the nation’s inpatient hospitals. Under the proposed rule, the hospital market basket percentage would increase by 3.2% (with a 0.8% reduction for productivity). The update is in line with last year’s update of 2.6%, although it is much lower than MedPAC’s recommendation of 4.2%. The American Hospital Association and the Federation of American Hospitals have both declared that this increase is insufficient due to hospital cost inflation and labor shortages

Comments on the rule are due June 10, 2025.

LOW-WAGE HOSPITAL POLICY

The proposed rule discontinues the low wage index hospitals policy for FY 2026 and subsequent years. This policy, put in place in 2020, makes upward adjustments to the wage indices of hospitals with a wage index value below the 25th percentile. CMS referenced the court decision of Bridgeport Hosp. v. Becerra, 108 F.4th 882, 887–91 & n.6 (D.C. Cir. 2024) as a reason for discontinuing the policy.

To partially offset this change, CMS is capping any hospitals’ wage index deduction by a maximum of 5% for FY 2026.

UPDATED WAGE INDEX AREAS

As CMS does every year, the agency is recalculating all hospital wage index areas to incorporate data from cost reporting periods beginning in FY 2022. The table of changes can be found here.

Hospital Inpatient Quality Reporting (IQR) Program

CMS is removing four reporting measures beginning with the CY 2024 reporting period/FY 2026 payment determination:

• Hospital Commitment to Health Equity
• COVID-19 Vaccination Coverage among Health Care Personnel measure
• Screening for Social Drivers of Health
• Screen Positive Rate for Social Drivers of Health

CMS is modifying four current measures:

• Hospital-Level, Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) – CMS is adding Medicare Advantage patients to the current cohort of patients, shortening the performance period from three to two years, and changing the risk adjustment methodology.
• Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Acute Ischemic Stroke Hospitalization – CMS is adding Medicare Advantage patients to the current cohort of patients, shortening the performance period from three to two years, and making changes to the risk adjustment methodology.
• Hybrid Hospital-Wide Readmission (HWR) and Hybrid Hospital-Wide Mortality (HWM) – CMS is lowering the submission requirements to allow for up to two missing laboratory results and up to two missing vital signs, reducing the core clinical data elements (CCDEs) submission requirement to 70% or more of discharges, and reducing the submission requirement of linking variables to 70% or more of discharges.

Hospital Readmissions Reduction Program

As CMS is doing for all quality measures, CMS is modifying readmission measures to add Medicare Advantage data, for both the measures and the calculation of aggregate payments. The agency is also shortening the applicable period of measuring performance from 3 to 2 years. CMS is also removing the COVID-19 exclusions and risk-adjustment covariates from the six readmission measures. These changes will be implemented for FY 2027.

Hospital Value-Based Purchasing Program

CMS is making a few changes to the VBP. First, the agency is adding MA data to most measures. Second, CMS is removing the Health Equity Adjustment from the scoring methodology. The agency is also adding COBID-19 patients back INTO the measures’ denominators (they had been removed during the pandemic and for a few subsequent years). In the same vein, CMS is adding patients with a diagnosis of COVID-19 back into the THA/TKA complication measures numerator and denominator. CMS will also be updating the CDC’s National Healthcare Safety Network (NHSN) healthcare-associated infections (HAI) chart-abstracted measures with the new 2022 baseline.

CMS has estimated that $1.7 billion is available in FY 2026 for value-based incentive payments.

DRG GROUPER CHANGES

CMS made several grouper coding changes based on feedback. See details here. In addition, CMS made many changes to severity levels in codes – those changes can be found here. This file also includes the 50 new procedure codes that CMS added as well.

New Transforming Episode Accountability (TEAM) Model

Last year, CMS proposed a new 5-year mandatory bundled payment program for all acute-care hospitals in a yet-as-unnamed CBSA. The model begins January 1, 2026, and ends December 31, 2030. Under this model, CMS would begin by focusing on lower extremity joint replacement, surgical hip femur fracture treatment, spin al fusion, coronary artery bypass graft, and major bowel procedures. Providers would bill as normal (MS-DRGs for inpatient, HCPCs for physician, etc.) for their procedures – but would receive target prices for episodes prior to each performance year. Performance for providers would be measured by spending as well as performance on three quality measures.

For this year, CMS has added a limited deferment period for certain hospitals, quality measure performance using patient-reported outcomes in the outpatient setting, improved target price construction, and expand the three-day Skilled Nursing Facility Rule waiver.

POST-ACUTE TRANSFER POLICY

CMS is proposing to add and remove MS-DRGs from post-acute transfer payment treatment in this rule. CMS is proposing to add MS-DRGs 209, 213, 318, 359, 360, 321, 322, 403, 404, 463, 464, and 465. CMS is proposing to remove MS-DRG 294, 295, and 509.

FEEDBACK

CMS is also asking for input on many aspects of the rule from stakeholders. Below we highlight some of their requests for feedback:

• For the overall Medicare program, CMS is putting out an RFI asking stakeholders to identify areas that are redundant or burdensome in Medicare regulations, including in conditions of participation, value-based purchasing, quality and safety reporting, telehealth and digital health. The deadline for comments is June 10, 2025.
• For quality reporting, CMS is issuing a second RFI on creating a digital quality measurement. Specifically, CMS wants to hear about:
• The anticipated approach to FHIR-based electronic clinical quality measure (eCQM) reporting in quality reporting programs.
• The potential use of FHIR-based patient assessment instrument reporting for inpatient psychiatric facilities.
• For quality reporting, CMS is requesting comments regarding how to measure well-being and nutrition in future years.
• For quality reporting, CMS is seeking input on future modifications to the Query of Prescription Drug Monitoring Program (PDMP) measure, including seeking public input on changing the Query of PDMP measure from an attestation-based measure (“Yes” or “No”) to a performance-based measure (numerator and denominator), and expanding the types of drugs to which the Query of PDMP measure applies.
• For quality reporting, CMS is requesting information on the Medicare Promoting Interoperability Program’s objectives and measures moving toward performance-based reporting.
• For quality reporting, CMS is requesting information on improvements in the quality and completeness of the health information eligible hospitals and CAHs are exchanging across systems.

On April 1, CMS released the proposed rule for skilled nursing facility (SNF) payments for FY 2026. Under the proposed rule, SNF payments would increase by 2.8% for FY 2026. This includes hospital market basket percentage would increase by 3.0%, with a 0.8% reduction for productivity, and 0.6% increase for a market basket forecast error adjustment. The update is lower than last year’s update of 4.6%. The American Health Care Association lauded the increase while also warning Congress that this increase wouldn’t make up for proposed Medicaid reform this year. CMS estimates that the overall economic impact of this proposed rule is an estimated increase of $997 million in payments to SNFs for FY 2026. Comments on the rule are due June 10, 2025.

PAYMENT UPDATES

The final case-mix adjusted rates (pp. 21-22 of the rule) can be found here.

CMS also released new wage index tables for FY2026 – they can be found here.

PROPOSED CHANGES IN PATIENT-DRIVEN PAYMENT MODEL (PDPM) ICD-10 CODE MAPPINGS

In FY 2020, CMS implemented the Patient-Driven Payment Model (PDPM) to focus on the needs of the whole patient, rather than focusing on the volume of services provided. CMS is proposing several changes to the PDPM ICD-10 code mappings

Interestingly, a large portion of these codes are for behavioral/mental health disorders – that have been moved off the primary diagnosis list because “treatment for these diagnoses would typically occur on an outpatient basis and not require an inpatient SNF stay in and of themselves. as reasons for a SNF admission.

SNF VALUE-BASED PURCHASING (VBP) PROGRAM

As CMS has done in all other payment rules, CMS is proposing to remove the SNF VBP Program’s Health Equity Adjustment from the VBP methodology beginning in FY 2027.

CMS also released the performance standards for the remaining VBP measures for FY 2028.

SNF QUALITY REPORTING PROGRAM (QRP)

Aligning with changes the new Administration is making on equity and social determinants of health in all proposed rules, CMS is proposing to remove four standardized patient assessment data elements beginning in FY 2027, including: one item for Living Situation (R0310); two items for Food (R0320A and R0320B); and one item for Utilities (R0330). CMS has stated that removing these reporting requirements will save SNFs $2,228,563.12 annually. SNFs will not be required to collect this data beginning with patients admitted on or after October 1, 2025.

CMS also seeks input on several RFIs, specifically: 1) future measure concepts on the topics of delirium, interoperability, nutrition, and well-being; 2) revisions to the current data submission deadlines for assessment data from 4.5 months to 45 days; and 3) advancing digital quality measurement and the use of Fast Healthcare Interoperability Resources® in the SNF QRP. For the latter, a detailed list of questions starts on page 59 of the rule.

FEEDBACK

CMS is also asking for input on many aspects of the rule from stakeholders. Below we highlight some of their requests for feedback:

• For the overall Medicare program, CMS is putting out an RFI asking stakeholders to identify areas that are redundant or burdensome in Medicare regulations, including in conditions of participation, value-based purchasing, quality and safety reporting, telehealth and digital health. The deadline for comments is June 10, 2025.
• For SNF quality, CMS would like feedback on RFIs on:
  • Future measure concepts for the SNF QRP;
  • Potential revisions to the data submission deadlines for assessment data collected for the SNF QRP; and
  • Advancing digital quality measurement in SNFs.

On March 14, 2025, the Senate Finance Committee held a hearing to consider the nomination of Dr. Mehmet Oz to be the Administrator of the Centers for Medicare and Medicaid Services (CMS). There was bipartisan agreement about certain topics, such as the need to address the high cost of health care, concerns about rural health, the benefits of telehealth, and the need to address concerns about the Medicare Advantage (MA) program. The biggest partisan difference on display was on the topic of how Republican reconciliation legislation would impact Medicaid funding. Democratic Senators argued that the proposal would lead to losses in coverage for those who needed it, and Republican Senators countered that Medicaid reform was about protecting coverage for those who really needed it.

OPENING STATEMENTS

• Committee Chair Mike Crapo (R-ID)
• Committee Ranking Member Ron Wyden (D-OR)

WITNESS TESTIMONY

•  Dr. Mehmet Oz

MEMBER QUESTIONS

Medicaid

Democratic Senators expressed concerns that the proposed Republican reconciliation legislation, as passed by the House of Representatives, would lead to Medicaid cuts that would hurt families, mothers, children, and providers (especially rural providers). In response to questions as to his thoughts about these potential cuts, he said he had not seen legislation that would cut Medicaid funding but said protecting Medicaid means making sure it is stable over the long term. When asked about his thoughts on work requirements from Sen. Raphael Warnock (D-GA), Dr. Oz said he supported them because of his support for the dignity of work but did not think they should be a barrier to coverage. Other Democratic Senators brought up the Medicaid expansion population. Sen. Maggie Hassan (D-NH) expressed her concerns that Medicaid budget cuts could lead some states to drop coverage for the expansion population. When asked directly about his thoughts on Medicaid expansion by Sen. Maria Cantwell (D-WA), Dr. Oz said it works for some states, but other states may try other ways to provide coverage to the uninsured.

In contrast, Republican Senators who spoke about Medicaid funding tended to talk about the need to ensure the program was stable for those whom it was initially intended to help, that is, the poor, mothers, children, and people with disabilities. Sen. Ron Johnson (R-WI) said there was a need to distinguish between Medicaid before and after the Affordable Care Act (ACA). Specifically, he argued that Medicaid expansion has been expensive, threatens the program’s ability to provide care for individuals such as people with disabilities, and has allowed certain states to game the system through the use of tools such as provider taxes. Dr. Oz agreed that by expanding the number of people on Medicaid without providing more resources to providers, you do stretch resources in a way that could impact those Medicaid was originally designed to help. Both Sens. Johnson and Marsha Blackburn (R-TN) cited concerns about Medicaid coverage for undocumented immigrants and foreign nationals. Dr. Oz said he would ensure that both Medicaid and Medicare eligibility are calculated accurately. He specifically cited an article about California’s effort to use federal dollars to pay for Medicaid coverage for undocumented immigrants. On another Medicaid-related topic, Committee Ranking Member Ron Wyden (D-OR) defended the nursing home staffing rule promulgated by the Biden administration. Sen. James Lankford (R-OK) countered that the rule may sound good but would lead to widespread closures, especially in rural areas. Dr. Oz said that examining this rule is something he wants to do early on if confirmed.

Medicare Advantage

Today’s hearing demonstrated that Senators on both sides of the aisle have concerns about the MA program. Specifically, Senators expressed concerns about charges that plans are upcoding to make patients appear sicker than they are, that they improperly deny coverage, that they engage in deceptive marketing, and that the program costs the government more than traditional Medicare. Even though Dr. Oz at one point proposed transitioning all Medicare patients to MA, he acknowledged these concerns and pledged to work with Senators on both sides of the aisle to address them. Notably, when asked by Ranking Member Wyden about what he saw as the biggest area of abuse in the private insurance market, he responded with MA sales practices. In answer to other Senators’ concerns about improper denials, he said he thinks there are too many procedures that require prior authorization and that standardization is needed when it comes to what does and what does not require prior authorization.

Chronic Health and Nutrition

Several Senators expressed concerns about the rate of chronic disease in America and asked Dr. Oz how CMS might address this concern. In answer to a question about this from Sen. Roger Marshall (R-KS), Dr. Oz said that incentivizing beneficiaries to make healthy choices was a worthy goal and said he had conversations with Ranking Member Wyden about this. Sen. Todd Young (R-IN) asked what reforms could be made in CMS to promote prevention efforts for chronic diseases. Dr. Oz gave the example of how, in MA, some plans provide a food allowance, but there is no guidance on how to eat healthy. Sen. John Cornyn (R-TX) argued that the Supplemental Nutrition Assistance Program (SNAP) subsidizes unhealthy foods.

Rural Health

Senators on both sides of the aisle expressed concerns about rural health. Sens. Blackburn and Tina Smith (D-MN) highlighted their concerns about the closures of rural hospitals. In answer to a question from Sen. Blackburn about the low wage index, Dr. Oz committed to working with Congress. Senator Chuck Grassley (R-IA) brought up his concerns about the placement of graduate medical education (GME) slots in rural areas. Additionally, Senators such as Steve Daines (R-MT) and Cortez Masto (D-NV) expressed their support for telehealth. Dr. Oz also shared his support for telehealth and noted how larger institutions in specific areas can serve their regions.

Prescription Drugs

Senators on both sides of the aisle mentioned concerns about the cost of prescription drugs. Sens. Lankford and Chuck Grassley (R-IA) expressed their support for pharmacy benefit manager (PBM) reform. Dr. OZ said that while he believes PBMs do play a role, there needs to be reforms to increase transparency. Democratic Senators such as Ben Ray Luján (D-NM) and Peter Welch (D-VT) asked Dr. Oz about his position on solutions such as Medicare price negotiation and international reference pricing. Dr. Oz says he wanted to use all available tools to lower prescription drug costs.

Other Issues

•  Sen. Steve Daines (R-MT) expressed his concerns about restrictions on Medicare beneficiaries’ access to innovative medical devices. Dr. Oz said the gap between when the Food and Drug Administration (FDA) approves a product and when Medicare and Medicaid patients can access it needs to be shortened.
• Sen. Cantwell asked Dr. Oz if he would support bundling patients at or below 150% of the poverty line to ensure affordable access to care, especially if ACA tax subsidies expire. He said he would commit to looking at it as a solution.

On March 11, 2025, the House Ways and Means Health Subcommittee held a hearing on Ensuring Access to Quality Post-Acute Care. Democratic members centered their questions on potential Medicaid and Medicare budget cuts, while Republicans concentrated on the nursing home staffing rule and home health services. Both parties addressed the need for telehealth services. Both parties agreed that there should be quality post-acute care.

OPENING STATEMENTS

• Chairman Vern Buchanan (R-FL)
• Ranking Member LLoyd Doggett (D-TX)

WITNESS TESTIMONY

• Dr. Dana Madison, DNP, MBA, BSN, RN, Compassion Home Health Care
• Paul Dongilli, Jr., PH.D. CEO, Madonna Rehabilitation Hospitals
• Jonathan Fleece, President and CEO, Empath Health
• Lisa Grabert, MPH, Visiting Research Professor, Marquette University
• Eric Carlson, Director of Long-Term Services and Supports Advocacy, Justice in Aging

MEMBER DISCUSSION

Medicaid and Medicare Budget Cuts

Democratic members focused their discussion on potential Medicaid and Medicare budget cuts. Rep. Judy Chu (D-CA) emphasized her view that Republicans are planning to cut $880 billion from Medicaid and that would negatively impact seniors’ ability to access long-term care. She pointed out that Medicaid already only covers a limited number of rehabilitation days and asked how cuts would affect seniors relying on both Medicaid and Medicare. Mr. Carlson responded by highlighting that Medicaid assists millions of Americans in covering Medicare premiums, with 10 million relying on it to manage significant health care expenses. He emphasized that long-term care costs are a major burden for individuals across various income levels and that Medicaid serves as a critical safety net. He warned that any cuts would be devastating.

Rep. Steven Horsford (D-NV) added that Medicaid is the primary payer for 60% of long-term care spending. He expressed his concerns that cuts would force providers to reduce hours, increasing the risk of inadequate care. He then asked what steps were being taken to protect nursing home workers from the impact of Medicaid cuts and what the consequences of cuts would be for the long-term care workforce. Mr. Carlson warned that if cuts of the magnitude described by Democratic representatives were implemented, providers would struggle to continue operating, with the consequences ultimately falling on the health care providers and workforce.

Rep. Don Beyer (D-VA) expressed his concerns about what he described as cuts to health care services in the continuing resolution (C.R.). He argued that the bill was not a clean proposal but rather one that would cut $280 million from Alzheimer’s, kidney, and heart disease research. He questioned whether patient care would be impacted by budget cuts of this size. Mr. Carlson’s response was straightforward: “The simple answer is no.” He emphasized that the research programs could not continue to provide the necessary support under such severe budget reductions.

Nursing Staffing Rule

Rep. Scott Fitzpatrick (R-PA) highlighted the staffing shortages in his home district, noting the increased pressure on health care providers. He asked how staffing has changed in recent years and what challenges these shortages pose in treating patients. Dr. Madison responded that the shortage of registered nurses (RNs) has been a persistent issue, with a deficit of about 1,000 RNs in the past. She emphasized that telehealth could help alleviate some of these challenges but noted that many nurses left the profession during the COVID-19 pandemic.

Ranking Member Lloyd Doggett (D-TX) referenced a 2023 Medicare Payment Advisory Commission (MedPAC) report that found skilled nursing facilities had funds exceeding 22% more than necessary, yet 20% of facilities relied on Medicaid to cover costs. He questioned whether there were enough workers to meet the required staffing standards. Mr. Carlson responded that regulations must be practical. He noted that while the staffing standard is not as high as some advocates had pushed for, 60% of facilities nationwide already meet it. He also argued that rural facilities have an extended phasing period until 2027 and 2029 to comply. Additionally, he also argued that if facilities demonstrate that labor shortages prevent them from meeting staffing requirements, they are exempt from penalties in that region.

Rep. David Kustoff (R-TN) then inquired about workforce shortages, asking whether many certified nursing assistants (CNAs) pursue higher levels of nursing education. Mr. Fleece acknowledged the challenges in recruiting and retaining workers, particularly given the pressures of runaway inflation. He stressed that hiring staff remains a significant challenge in the current health care landscape.

Home Health Services

Rep. Lloyd Smucker (R-PA) discussed the importance of occupational therapy (OT) as a service available to patients through Medicare Part A for home health and introduced a bill aimed at streamlining the process for accessing home health care. He asked how the bill would improve patient access to care and what the financial implications might be. Dr. Madison responded that the bill would allow payment for any episodes of care, and if OT services were to be provided independently, they would be able to deliver the necessary care. She explained that this approach could lead to cost savings for agencies by reducing the expenses they would otherwise need to spend on other services.

Rep. Kustoff inquired about how home health services are provided in rural areas and how rural-based services align with the national average. Dr. Madison explained that home health services currently offer patient monitoring, such as blood pressure management, but pointed out that these services are not reimbursed at all, which presents a significant challenge.

There was concern from Rep. Greg Steube (R-FL) about the drastic decline in the number of home health providers and he asked for insights into the widespread closure of home health agencies. Mr. Fleece responded by emphasizing that home-based care is a key solution to today’s health care challenges. He discussed various models within the home-based care environment, noting that larger, not-for-profit agencies play a significant role in providing care, especially in underserved areas.

Telehealth

Rep. Carol Miller (R-WV) discussed the challenges rural patients face due to a lack of critical support, noting that the absence of central care increases recovery time and raises the risk of complications. She suggested expanding telehealth usage in post-acute care settings, which would allow for face-to-face visits via telehealth, as a solution to address these gaps. She asked about the impact of limited access to care, and the difficulties families face when visiting their loved ones. Dr. Dongilli acknowledged that this is a real issue for families, highlighting the challenges they face in relocating and accessing the necessary resources to care for their loved ones. He emphasized the importance of making it easier and more helpful for families to receive payments and support, with the goal of improving care for both patients and families.

Rep. Fitzpatrick pointed out that his home district is facing staff shortages, which are compounded by increasing pressure. He asked how staffing has changed in recent years and how these challenges impact the ability to treat patients. Dr. Madison responded by noting that there used to be a shortage of around 1,000 registered nurses (RNs), and that telehealth could help alleviate some of the strain. She also noted that many nurses left the profession during the COVID-19 pandemic, further exacerbating the shortage.

Rep. Blake Moore (R-UT) added that in most cases, telehealth is the best option for ensuring access to care and asked how the quality of telehealth services could be improved. Mr. Fleece emphasized that his organization serves rural communities and noted that telehealth is the primary means of ensuring access to care, especially for individuals suffering from chronic or acute conditions. He stressed the importance of maintaining and expanding telehealth services to ensure these patients receive the care they need.

On March 7, 2025, the Medicare Payment Advisory Commission (MedPAC) held the second day of the March 2025 meeting. The first session focused on examining home health care use by Medicare Advantage (MA) enrollees. The second session discussed institutional special needs plans (I-SNPs). Findings from these sessions will be reported to Congress as part of MedPAC’s June 2025 report.

EXAMINING HOME HEALTH CARE ON MA ENROLLEES

MedPAC staff examined home health care use among MA enrollees, comparing it to Fee-for-Service (FFS) beneficiaries. A key focus was assessing data completeness and identifying patterns of home health care utilization. Researchers combined MA encounter data with the Outcome and Assessment Information Set (OASIS) records with the goal to obtain a more comprehensive picture of usage. MedPAC staff reported that they did get a more comprehensive picture of usage; however, reporting remains incomplete. The study found that 8.5% of MA enrollees used home health care in 2021, with higher utilization among older adults, low-income individuals, and those with prior hospital stays.

On average, MA enrollees who received home health care had 18.2 visits per user. The study also found that plan characteristics influenced usage patterns, with those in preferred provider organization (PPO) plans receiving more visits per user than those in health maintenance organization (HMO) plans, while provider-sponsored plans were associated with fewer visits. Additionally, cost-sharing played a role—MA plans requiring out-of-pocket payments for home health care saw lower utilization rates. When compared to FFS, MA enrollees were less likely to use home health care following hospitalization and, on average, received fewer visits. Even when controlling for provider differences, these trends remained unchanged. MedPAC staff acknowledged that the study had some limitations, including variations in data completeness across counties and the exclusion of in-home services provided outside the Medicare home health benefit. Moreover, they noted it was not possible to determine the appropriate level of home health use for beneficiaries. Moving forward, MedPAC staff noted these findings will provide insights into post-acute care trends within MA. MedPAC Commissioners raised several key points regarding the analysis of home health care use in MA. Commissioners highlighted the challenge of determining an optimal level of care, noting the common quality issues in home health. Others inquired about the availability of more recent data beyond 2021 and whether the study could explore reasons for home health use. Commissioner Lynn Barr questioned whether costs were being shifted to beneficiaries and whether rural and urban areas were analyzed separately, given the higher costs of care delivery in rural regions. MedPAC staff indicated some uncertainty about whether it was reflected in claims. However, rural and urban areas were examined separately. Others addressed concerns about data completeness, particularly regarding claims records and prior authorization requirements, asking if denials were documented.

Commissioners emphasized the importance of clearly distinguishing the differences between MA and FFS home health use. Commissioner Gina Upchurch built on this by seeking insights into the types of providers delivering home care and the perceived quality of care among MA beneficiaries. Others raised concerns regarding discrepancies in OASIS data and variations at the county level, while others highlighted the distinction between post-acute and home health services, questioning why some required OASIS submissions were missing.

Commissioner Kenny Kan suggested expanding research into long-term care and site neutrality, noting that encounter data remains the least complete. Commissioner Robert Cherry highlighted that MA patients had a 6% higher utilization rate, and findings suggested that those without prior hospital stays might experience greater equity in access to care. Commissioner Scott Sarran said he saw no evidence that MA plans were inappropriately reducing care but acknowledged the complexities of decision-making in the system. Finally, Commissioners expressed support for continuing this research, reinforcing its importance in understanding MA’s role in home health services.

INSTITUTIONAL SPECIAL NEEDS PLANS

The second presentation from MedPAC staff focused on I-SNPs, and how these specialized MA plans for beneficiaries requiring nursing home-level care compare and contrast with other plans. MedPAC Staff noted that Commissioners previously expressed interest in examining the experiences of long-stay nursing home residents and evaluating whether private health plans, like I-SNPs, could provide better care than traditional Medicare. I-SNPs serve a relatively small market, with about 125,000 enrollees in 2024, covering roughly 12% of long-stay nursing home residents.

The presentation highlighted that only 26% of nursing homes participated in an I-SNP in 2023, with participation more common among larger, for-profit, and urban facilities. Payment structures for these plans typically include capitated payments and performance-based incentives. Demographically, I-SNP enrollees tend to have longer stays and have lower mortality rates than residents who did not enroll. Additionally, I-SNP enrollees are more likely to be black, live in urban areas, and be Medicaid-eligible compared with other long-stay residents. MedPAC Staff noted that data on quality suggested that nursing homes with I-SNPs performed better in reducing acute discharges, readmissions, and emergency department visits. However, these findings were subject to limitations in risk adjustment and data exclusions.

MedPAC staff also noted that existing research on I-SNPs is limited but indicates that these plans can reduce inpatient hospital use by shifting care to nursing homes. Compared to other Medicare plan options, MedPAC staff found that I-SNPs have higher costs and bid amounts due to the high medical needs of enrollees, yet they receive lower rebates. The research also reviewed alternative models such as Dual-Eligible Special Needs Plans (D-SNPs), Medicare-Medicaid Plans (MMPs), and the Program of All-Inclusive Care for the Elderly (PACE), noting that each of these plans coordinates with Medicaid, unlike I-SNPs. Looking ahead, MedPAC plans to explore additional Medicare efforts to improve care for long-stay nursing home residents and will include an informational chapter in its June 2025 report to Congress.

MedPAC Commissioners discussed several key aspects of I-SNPs, including enrollment patterns, care quality, and potential improvements to the model. Commissioners raised questions about how patients enroll in I-SNPs compared to other plans. Others highlighted the advantage of having nurse practitioners provide care in nursing homes but expressed concerns about their employment structure and overall care quality.

There was also an emphasis from some Commissioners on the need to improve care for this vulnerable population. Commissioner Stacie Dusetzina requested additional information on the economics of nursing home care, including eligibility criteria and access. Commissioner R. Tamara Konetzka also questioned how to make the I-SNP model more widely adopted. There was common support for the concept of integrated care and exploring alternative models.

Commissioners emphasized the overlap between I-SNPs and skilled nursing facilities, highlighting the need to understand better the services provided. Commissioner Betty Rambur added that while I-SNPs help reduce hospitalizations and turnover, a major challenge lies in training future professionals, as many students do not view this field as a long-term career option. She praised the PACE model, which serves 300 nursing home-eligible individuals, stressing the importance of a team-based approach with pharmacists and nurses, as successfully implemented in Vermont and Minnesota. Commissioner Lynn Barr suggested a comparative analysis of I-SNPs, D-SNPs, and PACE to assess patient experiences and financial structures. Building on this discussion, Chairman Michael Chernew pointed to a broader challenge— determining when and how to separate these programs, given their shared focus on institutionalized beneficiaries.