Rehabilitation therapy providers have been bracing themselves for six months, anticipating potential cuts in reimbursement for services covered by Medicaid.
Meanwhile, providers are going on the offensive to ensure that HCFA uses relevant data when it finally issues its expected "salary equivalency" guidelines for speech and occupational therapy. The ruling was originally anticipated last July, but now is not expected to emerge until April at the earliest.
A trio of concerned trade groups has commissioned a study from Washington-based Buck Consulting Group to generate current and relevant therapist salary data. The group is in the process of presenting its findings to HCFA, according to Larry Lane, president of the National Association for the Support of Long Term Care.
The rehabilitation coalition-consisting of the NASL, the American Health Care Association and the National Association of Rehabilitation Agencies-hopes HCFA will consider its study before issuing the salary equivalency ruling, Lane said.
HCFA raised therapy providers' ire last April when it released a list of state-by-state "prudent buyer" hourly payment rates for occupational and speech therapy services (May 15, 1995, p. 32). Therapy providers protested the HCFA letter, mainly because it used 1989 and 1991 Bureau of Labor Statistics data in listing ranges of reimbursement rates.
For years, HCFA has been trying to rein in the ballooning costs of all therapy services. The April 1995 letter came on the heels of a General Accounting Office report that said Medicare payments for therapy in all settings jumped 167%, to $10.4 billion, between 1990 and 1993.
Under salary equivalency, Medicare reimburses a set hourly rate for the time each therapist spends on site. That amount includes salary. Costs for extras such as aides and assistants, travel or supplies are reimbursed through add-on allowances. HCFA set such guidelines for physical therapy and respiratory therapy in the early 1980s.
The Buck study, which includes a sample of hospitals and nursing homes, looks at 1995 compensation levels, Lane said. Details of the findings are forthcoming, but Lane said the study addresses two main questions.
First, it questions whether the Bureau of Labor Statistics data HCFA used in its April ruling reflects current hospital compensation for therapists.
Second, the survey asks whether there is a significant difference in what nursing homes pay to attract therapists vs. what hospitals pay salaried therapists. The April 1995 HCFA letter generated industry criticism because it only considered hospital payment data, which providers argue don't accurately reflect prices of therapy in a long-term-care setting.
As a result of the April letter, providers also complained that Medicare intermediaries used the unofficial guidelines to challenge therapy prices. Last June, HCFA clarified its first letter, saying it did not intend to trigger intermediaries' audits of therapy prices (July 10, 1995, p. 30).
Through all the uncertainty, providers are maneuvering to avoid the brunt of the potential reimbursement cuts.
"This heightened awareness at the intermediary level has led to a range of strategies," Lane said. Lane also serves as senior vice president for regulatory affairs at King of Prussia, Pa.-based NovaCare, a leading contract therapy provider.
The larger long-term-care companies, such as Beverly Enterprises and ManorCare, have made concerted efforts to bring therapy services in-house, industry observers say. The HCFA ruling will directly affect only contract therapy services, not in-house therapy.
Impending changes in rehabilitation therapy reimbursement also have led to increased industry consolidation. "Controlling the therapists is the name of the game" because there is a shortage of professionals in the field, according to Kenneth Drucker, an analyst with Standard & Poor's Corp. in New York.
In addition, providers already are looking beyond salary equivalency to 1997, when a prospective payment system for long-term care probably would include all ancillary services, Drucker said.