HCFA is trying to clamp down on the rising costs of some Medicare-covered rehabilitation therapy services. But providers object, saying HCFA's directive is based on invalid data and may be illegal.
In a letter to regional administrators, HCFA released state-by-state "prudent buyer" hourly payment rates that its 46 intermediaries can use when reimbursing providers for occupational and speech therapy services provided by skilled-nursing facilities, home health agencies and other providers. HCFA based those rates on hospital payment estimates and government wage data from 1989 and 1991.
In the letter, Barbara Wynn, HCFA deputy director of policy development, said the hourly rates are not "absolute limits" on payments but rather guidelines for use in reimbursing salaried and contract therapy providers.
But therapy providers object to use of the wage data on grounds it is too old and is inappropriate for nursing homes. They say the directive violates regulatory law because HCFA didn't notify providers or allow them to comment.
They also fear the so-called guidelines will become standard payment rates.
Furthermore, the directive isn't necessary, providers said, because HCFA expects to release "salary equivalency" guidelines that would allow nursing homes or other long-term-care providers to limit what they pay speech and occupational therapy contractors to what it would cost to pay salaried therapists.
"The industry is really asking why this (directive) is out there," said Tom Kowalski, executive director of the National Association for the Support of Long-Term Care. The organization represents ancillary-service providers to long-term-care facilities.
Kowalski said several long-term-care provider groups were to meet last week with HCFA officials to ask that the directive be rescinded.
Release of the payment rates sent the stock value of some publicly traded therapy firms falling.
HCFA has good reason to want to control the cost of therapy services. A March report by the General Accounting Office said overcharges are pervasive in that sector.
Medicare paid $10.4 billion in 1993-up $5.6 billion since 1990-for therapy in all settings.
In physical therapy, HCFA has instituted some limits on reimbursement to nursing homes when they contract with outside therapy providers. But many long-term-care providers have established therapy subsidiaries that bill HCFA directly for their services, allowing them to circumvent the limits.
In some cases, Medicare has been billed $600 an hour or more for services for which staff therapists are paid an average of $18 to $32 an hour when fringe benefits are included, the report said. By comparison, under HCFA's directive per-hour payment rates range from $38.42 to $56.69 for occupational therapy and from $36.62 to $59.05 for speech therapy.