As the smoke cleared from last week's passage of the massive federal spending package, nursing home chains were licking their wounds from an internal fight over a proposal that would have redistributed billions of dollars in Medicare skilled-nursing payments from one segment of the long-term-care industry to another.
Industry lobbyists said they didn't expect the fight over resuming cost-based reimbursements for some ancillary services to result in a long-term division in the industry. But supporters of the failed proposal said they may press for it again next year.
The proposal was backed by Owings Mills, Md.-based Integrated Health Services, the nation's third-largest nursing home chain, and two major long-term-care groups, the American Health Care Association and the American Association of Homes and Services for the Aging.
But it was opposed by Fort Smith, Ark.-based Beverly Enterprises, the nation's largest nursing home chain, and Toledo, Ohio-based HRC ManorCare, which is among the nation's largest. Both companies stood to lose under the proposal.
And each side enlisted giants of inside-the-Beltway healthcare lobbying to aid them. Integrated's chairman, Robert Elkins, M.D., a major Democratic contributor, along with nursing home executive Alan Solomont, a Democratic contributor and a 1996 presidential campaign fund-raiser, persuaded the White House to support Integrated's position.
But Beverly countered with the lobbying clout of Michael Bromberg, the one-time head of the Federation of American Health Systems and a well-connected Republican lobbyist.
In the end, Bromberg, Beverly and HRC ManorCare won. The proposal failed because it could not generate enough support to be included in the omnibus budget bill passed early last week, despite the support of the Clinton administration and such top Democrats as Senate Minority Leader Thomas Daschle of South Dakota.
Integrated, AHCA and AAHSA were pushing to overhaul the Medicare prospective payment system for skilled-nursing facilities. Their objective was a return to cost-based reimbursement for such nontherapeutic ancillary items as drugs, laboratory tests and respiratory therapy.
The PPS for SNFs went into effect July 1.
Medicare will pay SNFs $14.2 billion in fiscal 1999, which began Oct. 1. Nontherapeutic ancillary services represent 20%-25% of SNF payments.
Nursing home chains such as Integrated-which have specialized in post-acute care-claimed the PPS did not fully account for the high drug and laboratory costs accrued by complicated cases.