Medicare fee-for-service use in skilled nursing stayed stable between the end of 2022 and the end of 2023 but still hasn’t returned to pre-COVID levels, according to a new report on the state of the post-acute care sector.
The Trella Health analysis noted that this could indicate a “new normal” for skilled nursing.
FFS utilization rates did increase slightly — from 22.7% in 2022 to 22.9% in 2023 — according to the 24-page report published Thursday. In 2019, however, those rates had reached as high as 24.7%.
While acknowledging the possibility of a slow-but-steady recovery continuing into 2024 and beyond, the report didn’t list this as a safe assumption for providers.
“It’s possible that the skilled nursing industry still needs some time to recover from the impacts of the COVID-19 pandemic,” the analysts wrote. “The stability between the 2022 Q4 and 2023 Q4 reporting periods could also indicate that a slightly lower utilization is the new normal.”
In contrast to FFS utilization, Medicare Advantage enrollment continues its steady share increase after crossing the 50% mark in January 2023. Medicare Advantage was close to 55% of beneficiaries as of February of this year.
Providers’ ongoing struggles with Medicare Advantage payments and reimbursement rates in general have become increasingly concerning, the report noted.
“The financial sustainability of the post-acute care industry is being tested by fee-for-service reimbursement increases that lag well below recent inflation rates and a Medicare Advantage landscape that continues to grow while reimbursing post-acute agencies at lower Rates,” the analysts wrote. “These financial pressures are forcing providers to explore innovative optimization solutions to remain competitive, high-quality, and profitable.”
FFS utilization varied among individual states by as much as 22.7% — from 30.1% in Connecticut down to only 7.4% in Alaska. The latter, however, was a significant outlier. The next lowest utilization rate was 15.6% in Oregon.
Some states saw more significant changes in FFS utilization than the national average, but these largely canceled out overall, the report noted.
Despite remaining the state with the highest FFS utilization rates, Connecticut’s utilization decreased from 31.3% at the end of 2022 to 30.1% at the end of 2023 — a nearly 4% decrease year-over-year.
Idaho saw the largest increase in FFS — rising from 19.4% to 21.4% utilization for a roughly 10% increase year-over-year.
