Zach Miller: North Carolina seniors need CMS physician fee schedule corrected to protect their care in skilled nursing facilities
Zach Miller – Hedgehog Healthcare Associates
As the owner of assisted living communities here in North Carolina, I am proud of the work that we do to help our seniors live healthy, fulfilling lives. Part of this work involves coordinating with other local healthcare providers to ensure our residents receive the care they need to thrive.
Some of the care that our residents rely on includes that which is provided at skilled nursing facilities (SNFs). For seniors leaving the hospital and returning to our communities or moving to them for the first time, these facilities are an essential part of the care journey.
They serve as transitional facilities between hospital discharge and home. They provide patients with comprehensive support and high-quality physician care for a variety of medical services, from respiratory support to physical rehabilitation. Most importantly, good SNF care reduces hospital readmissions, which not only saves seniors and Medicare money, but means they arrive at assisted living healthier and more stable.
Today, seniors 65 and older make up roughly 20 percent of North Carolina's population. But changes made to the 2026 Physician Fee Schedule (PFS) by the Centers for Medicare & Medicaid Services (CMS) threaten the future care that our senior Medicare population may receive in SNFs.
The 2026 PFS reduced how certain practice expense costs were calculated for physicians in facilities, including SNFs. As a result, the reimbursement rates for independent physicians serving SNFs have decreased.
The change was part of a larger effort targeting hospital-acquired physician practices that shift billing to higher-cost settings without improving care. But an unintended consequence was that it treats independent physicians in SNFs the same as hospital-employed physicians, wrongly assuming that SNFs absorb physician practice costs in the same way that hospitals do.
This assumption couldn’t be further from the truth. Independent physicians serving SNFs cover their own staff, billing expenses, and other administrative costs. The rule, as written, cuts their reimbursement in a manner that was never intended. And with it, it puts patient care in these facilities at risk.
As reimbursement rates decline, independent physicians serving SNFs may not be in a financial position to continue to do so. They will be forced to either take on the loss or forgo serving SNF patients altogether. Patients in urban areas may quickly find another provider, but those in rural areas, like ours, could be left with no alternatives for this care.
At the same time, new, highly skilled physicians entering the profession will be unlikely to go the route of serving SNFs. Across the board, independent physicians may seek the stability of employment under hospitals or large health systems, worsening the situation that the 2026 PFS was looking to address.
The good news is that there’s a straightforward, targeted correction that can be made to the upcoming 2027 PFS to fix this and protect SNF care for seniors.
Under Place of Service 32, CMS already recognizes that physicians incur costs when treating patients in nursing facilities. As a result, the practice expense value for them much more accurately reflects the true costs of delivering a service.
Given that independent physicians working in SNFs carry those same expenses, and oftentimes are treating the same patients in the same building as a nursing facility, CMS must align the treatment of SNFs under Place of Service 31 to that of nursing facilities under Place of Service 32.
Making this technical correction to the 2027 PFS is essential to ensure North Carolina’s vulnerable seniors can continue to count on quality physicians at SNFs for critical care.
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