Estimated Reduction in CAH Profitability from Loss of Cost‐Based Reimbursement for Swing Beds
Over the past several years, a few reports have suggested Medicare could reduce costs by changing swing bed reimbursement from cost-based to the Skilled Nursing Facility Prospective Payment System (SNF PPS). Rural communities and CAHs are concerned about the proposed change from cost-based reimbursement to the SNF PPS because it would reduce the amount of Medicare reimbursement to CAHs. Approximately 92% of CAHs provide care in swing beds,3 and for some rural communities, swing beds are the only source of post-acute care.1 Further, CAHs have come to rely on swing beds to manage patients and staffing and to help ensure financial stability of their organizations.2
In the brief, Estimated Reduction in CAH Profitability from Loss of Cost-Based Reimbursement for Swing Beds, the North Carolina Rural Health Research Program estimates the impact of potential loss of cost-based reimbursement for swing beds on CAH profitability, and examines the characteristics of CAHs that would be most affected by such a change in reimbursement.
KEY FINDINGS
- If Medicare swing bed days were reimbursed using the Skilled Nursing Facility Prospective Payment System (SNF PPS) rather than cost‐based reimbursement, the median change in CAH 2016 operating margin is estimated to be ‐2.16 percentage points.
- CAHs with the greatest estimated reduction in operating margin have a higher swing bed average daily census and a greater percentage of inpatients covered by Medicare.
- The CAHs most negatively affected by a change in swing bed reimbursement are, on average, smaller, more isolated, and located farther from the nearest skilled nursing facility.
—–
1. Reiter K, Freeman V. Trends in Skilled Nursing Facility and Swing Bed Use in Rural Areas Following the Medicare Modernization Act of 2003. Findings Brief, 2011. NC Rural Health Research Program, UNC-Chapel Hill. Available at: http://www.shepscenter.unc.edu/rural/pubs/report/FR101.pdf.
2. Freeman V, Radford A. Why Use Swing Beds? Conversations with Hospital Administrators and Staff. Findings Brief, April 2012. NC Rural Health Research Program, UNC-Chapel Hill. Available at: https://www.shepscenter.unc.edu/wp -content/uploads/2014/04/FB105.pdf.
3. Authorized in the Omnibus Reconciliation Act of 1980 (ORA 1980), the national swing bed program was implemented to expand access to long-term care and post-acute skilled nursing services for rural residents and to improve efficient use of inpatient hospital beds in small and rural hospitals. The 1980 Act allowed Medicare and Medicaid to reimburse rural hospitals with fewer than 50 beds for long-term care or post-acute nursing services provided in their unfilled acute care beds (called “swing” beds). Omnibus