National Nursing Home Spending Reaches $196.8 Billion in 2020 – Skilled Nursing News

Nursing homes were among the main health care providers to drive spending growth in 2020, along with hospitals and physicians, contributing to a 9.7% increase to reach $4.1 trillion.

The acceleration in spending was caused by a 36% increase in federal expenditures, according to a report published by peer-reviewed journal Health Affairs, in response to the pandemic. The report is based on a new analysis from the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS).

Provider assistance programs – specifically the $122 billion Provider Relief Fund (PRF) and $53 billion Paycheck Protection Program (PPP) – as well as growth in federal Medicaid payments were other contributing factors to 2020 health care spending growth, Washington, D.C.-based Health Affairs said.

Nursing facilities and continuing care retirement communities (CCRC) specifically spent $196.8 billion in 2020, $22.6 billion more than 2019.

“The substantial growth in health care spending was the largest since 2002 and driven by the unprecedented government response to the global pandemic,” Micah Hartman, a statistician in the CMS Office of the Actuary and first author of the Health Affairs article, said in a statement. “Federal spending increased rapidly in 2020 as the government increased public health spending to combat the pandemic and provided significant assistance to health care providers.”

Major payers’ spending in 2020 grew between Medicaid and Medicare, by 3.5% and 9.2% respectively, while private pay and out-of-pocket declined by 1.2% and 3.7%.

Medicare accounted for 20% of total national health care spending – reaching $829.5 billion in 2020, researchers wrote, experiencing slower growth than in 2019 with the exception of nursing home care.

“This was driven by increased utilization and spending, resulting primarily from a waiver that allowed coverage of skilled nursing facility services without a prior inpatient hospital stay,” Hartman said during a press conference reviewing the report.

Medicaid expenditures reached $671.2 billion in 2020 and accounted for 16% of total national health spending, Health Affairs said. Private health insurance spending reached a whopping $1.15 trillion in 2020, outpacing both Medicare and Medicaid spending to take up 28% total national health care expenditures.

“There was significantly higher federal public health spending, as well as more federal spending for Medicaid,” Hartman said during the press conference. “To give a sense of the magnitude of this funding, if we exclude spending for other federal programs and federal public health expenditures, the increase in total national health care spending would be just 1.9% in 2020, as compared to the 9.7% when it is included.”

Nursing homes saw a change in payer contributions between 2019 and 2020, most significantly an increase in third-party payers and programs – home health, hospitals, physician/clinical services, dental and other professionals saw the same spike in third-party contributions. Between out-of-pocket, health insurance and third-party payers, nursing home contributions increased from 3.9% in 2019 to 13% in 2020.

Medicare fee-for-service (FFS) spending decreased 10% between 2019 and 2020, accounting for 55% of total Medicare spending compared to 61% the previous year. The change was caused by a 5.5% decrease in expenditures for health care goods and services – this is the first time this statistic decreased since 1999, Health Affairs noted.

Nursing home care was absent from the goods and services spending, as it’s considered a “nondurable medical product.”

Medicare private plan spending accounted for 45% of total Medicare expenditures, experiencing a 17.1% increase from 2019.

The share of the economy devoted to health care spending “spiked” Health Affairs researchers wrote, to 19.7% while gross domestic product decreased 2.2%.

2020 ushered in “significant shifts” in types of insurance coverage too and the overall number of uninsured people fell, the report found.


Amy Stulick

A Buffalo transplant living in LA, Amy has worked as a business journalist for more than two years and has been in the profession for seven-plus. She is an avid (sometimes poolside) science fiction reader, nature lover and roller derby novice.

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