Nursing homes are fighting for a $320 million Medicare pay cut they say will make it harder to provide care during an already challenging time.

The Centers for Medicare and Medicaid Services on Tuesday released a proposed rule that would reduce Medicare Part A reimbursement in fiscal 2023 to compensate for what the agency calls an unintentionally high wage rate in fiscal 2020.

“This can put a lot of pressure on operations, especially for smaller personal skilled nursing facilities,” said Karen Maseli, assistant vice president of operations for ProMedica Senior Care.

CMS is proposing a 3.9 percent pay rise for nursing homes to combat inflation and other rising costs. But that hike will be offset by a 4.6% cut to correct the agency’s previous overpayment of medical bills. The net effect will be a $320 million reduction in nursing home spending in the next fiscal year.

Medicare is expected to spend $35 billion on nursing home care this fiscal year. Nursing homes have historically relied on Medicare reimbursement to compensate for the relatively low rates Medicaid pays.

this Proposed Medicare Cuts Originated from CMS’ transition to a patient-driven payment model for skilled nursing facilities in 2019.

The previous reimbursement model, the Resource Utilization Group system, was reimbursed based on the number of minutes of therapy provided per week. To discourage providers from responding to this incentive by providing over-the-top treatment, CMS has designed a patient-driven payment model that instead pays based on the patient’s condition and care needs. The government has also relaxed rules to allow up to 25 percent of treatment in group settings.

The new policy should be budget neutral. However, CMS found that the 5% or $1.7 billion it paid in fiscal 2020 was too much.

Jenny Fink Boyle, vice president of health policy at LeadingAge, which represents the nonprofit aging service provider, said the proposed rule is an effort by the agency to correct the problem, but it is poorly timed. Nursing homes have been struggling and mired in a staffing crisis throughout the COVID-19 pandemic.

“The government is cutting spending when no aged care providers can afford it. We are working with the government to improve our nation’s nursing home system, but lowering reimbursement rates is not the right place to start.”

In light of the ongoing COVID-19 situation, CMS has elected not to recalibrate the payment system in fiscal 2022. In the proposed rule, CMS said the agency sought to take the pandemic into account when setting rates for fiscal 2023.

Nursing homes see the proposed cuts as a threat to their operations, said Bill Goulding, principal healthcare consultant at Post-Acute Care Solutions Consulting. After battling COVID-19 for the past two years, he has heard from clients that they are only focused on staying open.In addition to the health and workforce challenges posed by the pandemic, it has hampered nursing home efforts To adapt to new payment models, he said.

However, Goulding said nursing home operators should have seen this. “No one should be surprised that CMS is targeting budget neutrality. They’ve been very clear about that from the start,” he said.

Tim Nanof, director of health care and education policy for the American Speech-Language-Hearing Association, said the CMS proposed rule would involve therapists working in nursing homes.New payment model underestimates therapy and leads to thousands of speech and occupational therapists lose job Or see their hours reduced, he said.

The agency’s adjustment to nursing home wages also coincides with President Joe Biden’s broad push List of proposals to transform the industry.

Shara Siegel, director of government affairs at Premier, said lowering Medicare wages while the Biden administration seeks policies such as minimum staffing requirements and stricter safety and quality rules presents a “paradox” to the industry. “They’re cutting funding for suppliers, but they have those expectations in other areas,” she said.

CMS to accept comments on proposed rule until June 10.