HCFA took two actions last week that brought billions of dollars in financial relief to the beleaguered long-term-care industry.
The early Christmas presents include the extension of a 20% increase in Medicare payment rates to skilled-nursing facilities and the postponed implementation of a complex new series of patient reimbursement categories that the industry considered onerous.
Last year Congress allocated a stopgap 20% increase through the Balanced Budget Refinement Act of 1999. Initially that bump was scheduled to expire this Oct. 1. However, it has been extended through 2001; Medicare payments to skilled-nursing facilities will increase by $3.1 billion to $17.5 billion for fiscal 2001.
Medicare payments constitute less than 10% of revenue for the nation's 14,887 Medicare-certified nursing homes, and even that figure took a hit from the Medicare spending restraints of the Balanced Budget Act of 1997. The budget law calls for a new prospective payment system, which would pay nursing homes on a complex formula that considers the severity of patient condition along with the differences in local wages and cost of living, similar to the DRG system for acute-care hospitals.
The extension in payments was allowed because HCFA knew it could not implement the new payment categories by Oct. 1. The payment categories were intended to recognize the higher cost of caring for sicker patients. HCFA said faulty data flawed its research and did not support the proposal to move to 178 from 44 payment categories.
"We will continue our research to make sure that Medicare is paying appropriately for the skilled-nursing care provided to beneficiaries, including those with serious health problems that require complex care and treatment," HCFA Administrator Nancy-Ann Min DeParle said in a written statement.
HCFA is expected to publish a final set of regulations extending the rate hike in the July 31 Federal Register.
Robert Greenwood, a spokesman for the American Association of Homes and Services for the Aging, which represents 5,600 nonprofit nursing homes, said his members were relieved both by the announcement of the continued increase in payments and the delay in implementing the new payment categories, called resource utilization groups, which HCFA proposed in April.
"This is an ongoing process, but our initial reaction is very positive. We think these (RUG) changes are happening very quickly, too quickly for providers to absorb," Greenwood said.
Patrick Brady, a spokesman for the patient advocacy group Citizens for Long Term Care, said providers should be pleased by the HCFA announcements.
Patients don't seem to be greatly affected by the RUG postponement or increase in reimbursements. Except for patients dually eligible for Medicare and Medicaid, Medicare payments for nursing home care are limited to 100 days following a hospital stay.
Separately last week, HCFA unveiled government research that shows nursing homes with lower staffing levels have more quality-of-care problems. Speaking before the Senate Special Committee on Aging, DeParle called the preliminary results of the 10-year study "troubling."
Leaders of the nursing home industry said that to increase staff, homes will need more federal money, particularly relief from Medicare reductions in the Balanced Budget Act of 1997.
Committee Chairman Sen. Charles Grassley (R-Iowa) said that based on the study, he thinks Medicare relief should be tied to increased staffing levels.
--With Kristen Hallam