Since November’s crash, skilled nursing prices continue to rise.
We sometimes wonder if the members of the Medicare Payment Advisory Commission, or MedPAC, ever get frustrated that their recommendations often go unheeded by Congress. This is certainly the case with recommendations for skilled nursing Medicare reimbursement. Last week, MedPAC recommended a Medicare rate freeze for SNFs through 2019, which Congress will surely ignore….again. Because Medicaid policy is not part of its charter, the MedPAC commissioners ignore it, even though they are keenly aware that in SNFs, Medicare payments subsidize low Medicaid payments. Medicare payment increases are usually quite small, but that hasn’t stopped buyers in the market from paying above-average prices. And after the swoon in SNF stock prices last month, they are back on the rise. Genesis HealthCare is up 15% since the end of November, National Healthcare is up 10%, and Kindred Healthcare, although exiting the SNF business, is up 13%. Are these increases part of the so-called Trump rally? Or did investors think rock bottom had been hit? We think the latter.
