PROVIDER REIMBURSEMENT PDF Free Download
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April 2025 | LeadingAge.org
THE REIMBURSEMENT CONUNDRUM
Long Term Services and Supports (LTSS) and post-acute care (PAC) providers’ financial picture is comprised of a
delicate balance of payments from Medicare, Medicare Advantage (MA), Medicaid, Veterans’ Affairs and private
pay. For decades there has been an understanding that Medicare payment rates subsidize Medicaid
underpayments. This cross subsidization created equilibrium allowing providers to cover their overall costs, which
are predominantly made up of staffing costs. However, as more older adults opt into MA plans, this equilibrium is
being disrupted, and providers are faced with a critical imbalance. Providers’ core revenue is now derived from
payers – MA and Medicaid – whose payments don’t cover costs. Congressional proposals to cut or cap Medicaid
would further throw providers’ financial viability out of balance. If providers cannot pay their bills, at some point, they
must decide if they can continue to provide services.
These cost and revenue pressures are forcing providers to reduce access by limiting new admissions. These
access issues impact not just Medicare and Medicaid beneficiaries but any American needing care. Many home
health agencies provide both Medicare skilled home health care and Medicaid personal care services that allow
older adults to stay in their home instead of accessing more costly nursing home care. When providers close, all
services are lost regardless of payer.
Congress Must Ensure Access to Health Care for All Americans by:
• Ensuring government program payments to providers cover the cost of delivering care and services.
• Reducing administrative burden of delivering care and services, streamlining and standardizing processes to
authorize services and receive payments.
• Conducting cost-benefit analysis of existing and new regulations. Eliminating regulations which cost too
much for the value they deliver.
Medicare Payments Must Reflect Service Costs, Regulatory Compliance, and
Adequate Staffing
Over the past six years in Medicare, skilled nursing facilities (SNFs) and home health agencies (HHAs) experienced
payment methodology overhauls. It has been difficult to compete for staff who can opt for easier jobs that pay more.
For example, according to analysis by Plante Moran (2025 Skilled Nursing Facility Medicare Benchmarking Report),
SNF average wage rates increased 4-5% between 2022 and 2023, but SNF Medicare rates were only increased an
average of 1.95% during this time. Medicare home health payments have been cut by 10% since the
implementation of the Patient Driven Groupings Model. Hospice payment updates have been minimal, and many
hospices are targets of increased audit burden that includes payment recoupment during the appeals process.
Reimbursement isn’t keeping pace with the cost of care and services.
Ensure Provider Payment Adequacy and Reduce Administrative Burden in MA
Compounding the financial impacts on providers, MA plans further reduce providers’ revenues by first adopting
Medicare reductions to provider payments (e.g., QRP, VBP, sequestration) and then offering even lower rates than
PROVIDER REIMBURSEMENT
April 2025 | LeadingAge.org
traditional Medicare for the same services while imposing increased administrative burden on providers. MA plans
now pay PAC providers 50-80% of what traditional Medicare pays for the same Medicare service.
Moreover, MA plans impose additional administrative burdens on providers who now must navigate myriad plan
portals, policies, forms and procedures. This extra work requires providers to hire additional highly qualified staff to
meet the MA plan work, further reducing the net revenue providers realize from the plans. Simply, MA plan
payments to PAC providers fail to cover the cost of delivering services or managing the administrative complexity of
contracting with multiple MA plans. With over 50% of Medicare beneficiaries now enrolled in MA plans, inadequate
provider payments will only create a financial death spiral forcing providers to deny admissions or close their doors
altogether.
Access to health care services is a fundamental responsibility of the government. Without accurate data,
policymakers are ill-equipped to assess whether plan payments to providers are sufficient to maintain access to
essential services and whether plan utilization management practices pose barriers to needed services.
Congress Must Enact Legislation to Reform Medicare Advantage to:
• Collect Data to Assess MA Payment Adequacy to Providers: Build upon and introduce legislation similar
to the Encounter Data Enhancement Act that: 1) collects the necessary claims data to analyze provider
payment types and adequacy, 2) ensures plans report the data accurately and completely, and 3) authorizes
MedPAC to analyze the data and report on provider payment adequacy, quality of care provided, and
compare the value delivered through MA and Medicare FFS programs.
• Preserve Access and Reduce Administrative Burden: Reintroduce a version of the Improving Seniors’
Timely Access to Care Act or similar legislation to modernize and standardize the prior authorization
processes for all providers, expedite decision making and ensure plan accountability through required prior
authorization reporting to CMS on volume and outcomes.
• Evaluate establishing an MA provider payment floor to ensure access to essential services.
Protect Medicaid for Older Adults
Medicaid is the primary payer of long-term services and supports (LTSS) provided to older adults. Older adults are
eligible for Medicaid due to frailty and an inability to pay for needed supports. If Medicaid is capped or cut, it will
further undermine providers’ financial viability and in turn, reduce access to LTSS for older Americans. Without
Medicaid, families face difficult choices. If they care for their loved one in their homes, it often means someone in
the family must forgo work outside the home jeopardizing their own ability to pay their bills. Medicaid is their safety
net to ensure their loved ones receive supports for their daily needs and are safe while their family continues to
work. Cuts and caps to Medicaid will have ripple effects across the healthcare and services sector shaking the
financial viability of important services and threatening the health and safety of older adults.
Protect Older Adults’ Access to Life-Sustaining Services:
• Oppose changes to Medicaid designed to limit federal financial participation either via cost shifting to states
or imposing barriers to access services like community participation or work requirements that would cause
states significant financial and administrative burden.
• Support ongoing availability of tax-exempt municipal bonds as financing mechanisms for provider service
expansion.
