Total Medicare spending for skilled nursing facilities increased $1.1 billion (4.4%) between 2019 and 2020, although 200,000 fewer traditional Medicare beneficiaries were using SNF services after the pandemic started in the early months of 2020. That’s according to an analysis published Wednesday by the Kaiser Family Foundation.
Skilled nursing occupancy dropped significantly in the wake of the pandemic, and one was the drop in elective surgeries, such as knee replacements, that require rehabilitation in a facility. Beneficiaries who did require skilled nursing during the time that elective surgeries were limited generally had more intensive and costly needs, the study showed.
SNF spending per user increased $2,724 (16.3%), rising to $19,394 in 2020 from $16,670 in 2019. The authors noted that the sharp growth in spending followed several years of more gradual increases in spending per SNF user, which averaged 1.5% a year between 2012 and 2019.
“Those trends, combined with early evidence of the potential for accountable care organizations (ACOs) to reduce traditional Medicare spending on SNF services, helped foster an expectation that greater coordination and communication could reduce SNF spending without compromising quality as ACOs expanded,” the authors said.
Fewer Medicare beneficiaries were entering SNFs in 2020, but those who did tended to stay longer than in the past. In 2020, the average length of stay was 26.3 days, compared with 24.7 days in 2019. At the same time, the average Medicare SNF spending per day rose 9.1% from 2019 to 2020, going from $490 to $534. This increase was the largest since 2011, according to Kaiser.
Average spending per SNF user was $2,724 (16.3%) higher in 2020 compared with 2019, due to an increase of $44 per average spending per day and driven by an increase in average spending per day coupled with a 1.6 day increase in the average length of stay.
Medicare beneficiaries aged fewer than 65 accounted for a disproportionately large share of the increase in total Medicare SNF spending between 2019 and 2020. Although this demographic represented less than 10% of all traditional Medicare beneficiaries using SNF services, the group accounted for 26% of the increase in SNF spending between 2019 and 2020.
