Long-term-care groups agree with President Clinton that balanced-budget legislation should end what is known as Medicare "double-dipping" by hospitals with skilled-nursing beds.
But some of those groups warn the president's plan to restrain Medicare skilled-nursing spending growth also could discourage use of appropriate skilled-nursing care and increase inpatient lengths of stay.
The White House plan would seek to reduce growth in Medicare post-acute payment by defining a hospital discharge to a skilled-nursing facility or other provider exempt from prospective payment as a "transfer."
That redefinition would mean hospitals would receive lower payments for patients who are moved into skilled-nursing beds, whether they are hospital-based or in a freestanding facility.
The Congressional Budget Office estimates that change would save $3.3 billion between 1998 and 2002, the year in which Congress and the White House want a balanced federal budget.
The CBO estimates that Medicare under current law would spend $83.3 billion on skilled-nursing facilities during those five years. For PPS-exempt hospital treatment, Medicare would pay $78.8 billion over the same period.
The lower payments would cut into a growth sector for hospitals. According to the Prospective Payment Assessment Commission, 70% of hospitals owned post-acute capacity in 1994.
Robert Hartwell, senior lobbyist with the American Health Care Association, which represents 11,000 for-profit and not-for-profit nursing homes, said the inpatient PPS has been an incentive for hospitals to discharge their patients into skilled-nursing settings more quickly, before hospitals' patient-care costs exceed the payment rate.
But as inpatient lengths of stay have fallen, skilled-nursing costs have shot up because nursing homes must provide more intensive care to sicker patients, Hartwell said. Meanwhile, HCFA has not adjusted inpatient fees to changing practice patterns.
"HCFA forgot to do one thing: They forgot to save the money," Hartwell said. "The money hasn't come out of the acute-care side."
Scott Parkin, spokesman for the American Association of Homes and Services for the Aging, which represents 5,000 not-for-profit nursing homes, argued the early discharge problem is especially evident in hospitals with their own skilled-nursing beds.
"There's some loopholes there, and (hospitals are) taking advantage of them," Parkin said.
Tom Nickels, vice president of federal relations with the American Hospital Association, disputed those claims. Although ProPAC has found hospitals that own post-acute providers are more likely to move patients into their own facilities, Nickels said that difference hasn't been significant.
And if balanced-budget legislation also includes a PPS for skilled-nursing care, as Clinton is seeking, hospitals no longer would have any incentive to refer patients to their own skilled-nursing beds, Nickels said.
But Hartwell also warns that the administration's plan to reduce inpatient payments for patients moved into skilled-nursing beds will merely encourage hospitals to keep Medicare patients longer and then discharge them to their homes so they can collect the full payment rate.
"Rather than addressing the (inpatient payment) recalculation issue . . . HCFA came up with a policy to discourage post-acute care," Hartwell said.
Hartwell said a preferable policy would be for Medicare to pay hospitals a full PPS rate when discharging patients to freestanding skilled-nursing facilities but limiting inpatient fees when hospitals transfer patients to their own skilled-nursing beds.