HCFA is instructing intermediaries to ease up in their reviews of nursing homes' therapy costs in the wake of dropping stock values for some long-term-care companies.
The agency for the third time is telling intermediaries not to apply hospital data as arbitrary payment limits for Medicare-covered occupational and speech therapy delivered by skilled-nursing facilities and other providers.
HCFA supplied the hourly payment rate data to regional administrators in April 1995 as part of an effort to limit the growth in Medicare-covered therapy costs under "prudent buyer" guidelines.
In June 1995 the agency said intermediaries should use the hourly rates as a guideline for a reasonable reimbursement rate for therapy but shouldn't use them as an absolute limit.
However, therapy providers said intermediaries, prodded by some regional offices, have attempted to apply strict limits on how much they will reimburse nursing homes for buying occupational and speech therapy services for their residents.
Provider groups said those intermediaries also denied them the right to offer the government additional information that would support higher payment rates.
In an Oct. 17 memo to regional administrators, Barbara Wynn, HCFA's deputy director of policy development, reiterated the agency's position that the published hourly rates not be used as absolute limits.
Thomas Hoyer, director of the office of chronic care and insurance policy in HCFA's bureau of policy development, said the agency is examining the methods that three intermediaries-Mutual of Omaha, Blue Cross of Minnesota and Aetna-are using in their reviews of nursing home therapy cost reports from fiscal 1994.
But he also said the intermediaries are not taking any unusual action by reviewing the cost reports and auditing providers when therapy costs appear to be greater than necessary.
"Companies in the business awhile could well have anticipated this," Hoyer said.
In 1993, charges for Medicare-covered therapy services by nursing homes and other providers totaled $10.4 billion.
The intermediaries' more aggressive approach toward therapy costs was part of the reason why Mariner Health Group recorded a $10 million charge in the third quarter and forecast lower earnings than analysts expected (Oct. 21, p. 22).
Mariner took a one-time charge to build up its financial reserves to offset the expected reductions in reimbursement for therapy and other services.
That decision led to a 45% decline in Mariner's stock price in one day earlier this month, and other long-term-care companies also saw their stock values dip.
Some therapy providers grumbled, however, that Mariner's problems go beyond the intermediaries' examination of therapy charges.
They said Mariner's move makes both therapy providers and skilled-nursing facilities look as though they are overcharging the government.
That image also has been perpetuated by a recent General Accounting Office report to Congress that said total charges for occupational therapy in 1995 were nearly 20 times greater than they were in 1989.
Therapy providers, along with HCFA, said the report was flawed because it cited what therapy providers charged, not what Medicare actually paid.