Skilled-nursing facilities are being overpaid under a Medicare prospective payment system implemented July 1, according to a report released last week by HHS' inspector general's office.
However, it is unlikely that the current rates, which will be in effect until Oct. 1, 1999, will be reduced. Instead, HCFA will wait until fiscal 2000, when it has gathered more information, to fix the problem, according to agency officials.
Under the new PPS, skilled-nursing reimbursements are based 25% on a national rate and 75% on a facility-specific rate. However, an audit by the inspector general found that historic skilled-nursing rates were inflated because of "unnecessary care and excessive salary costs for therapy services." The agency recommended HCFA reduce the PPS rate to account for the improper costs.
While the agency did not specify how much the rates should be reduced, it did note that its recent annual audit of all Medicare payments found about $629 million in improper billings to skilled-nursing facilities in 1997.
"We are concerned that the methodology used will inflate (the PPS) rates, since HCFA has not made a downward adjustment for unallowable costs identified in prior audits, which would affect the base-period amounts," the agency said.
The agency's audit found a variety of costs improperly included in the skilled-nursing base-year payments.
For example, one facility received $15,362 for 61 days of care. The agency later found that the money had been used to treat a patient who did not require skilled care.
To fix such problems, HCFA and the inspector general's office are working to develop a study of skilled-nursing costs to see just how much the reimbursement rates are overstated.
One problem is that under last year's balanced-budget law, which enacted the PPS, the reimbursement rates are based on 1995 cost reports. However, many of those records may no longer be available to review, according to the inspector general's office.
Another question is whether HCFA has the authority to change reimbursement rates retroactively without congressional action. HCFA officials said in July they would need legislation to make any changes, according to William Scanlon, director of health financing and systems issues for the General Accounting Office.