The SNF PPS final rule (finally).

Since July 1998, administrators and DONs have been struggling to understand the intricacies of Medicare's Prospective Payment System (PPS) rules. Indeed, they have cared for patients without formal assurance that what they were doing was actually in compliance with any Medicare "final rules." In addition to the interim final regulation published on May 12, 1998, Medicare's policies have been conveyed through Question and Answer guidance, Program Memoranda and various informal avenues, none of which were as definitive as a final rule. Finally, this July 30, the Health Care Financing Administration (HCFA) published in the Federal Register two important regulations impacting skilled nursing facility (SNF)-based PPS and consolidated billing:

* HCFA-1913-F is the final rule governing the implementation of SNF PPS and consolidated billing. This rule, which became effective on September 28, 1999, offers numerous clarifications that will be tremendously helpful in operationalizing SNF PPS.

* HCFA-1056-N is the update notice that HCFA is required to publish annually. In this payment notice, HCFA announces that an inflation factor of 2.1% will be applied - beginning October 1, 1999, and through September 30, 2000.

We are all well aware that the first year of SNF PPS has been difficult financially for virtually all SNFs, and disastrous for several publicly traded nursing home companies and contract therapy vendors. Within this challenging operating environment, national trade associations representing long-term care providers and ancillary vendors, in concert with professional associations representing therapists, pharmacists, physicians and others, are relentlessly lobbying HCFA and the Congress for regulatory relief from the Balanced Budget Act of 1997. All of these voices are seeking a restoration of "excess" savings to the Medicare SNF program in order to maintain high-quality SNF care. Within this context, the final rule contained both good news and bad news.

The bad news is that HCFA declined to take any policy actions to address widespread concerns with the inadequacy of nontherapy ancillary payment and payment levels overall HCFA did not create outliers, did not carve out any nontherapy ancillary costs and did not offer any refinements in the case-mix methodology. According to HCFA, they received more than 500 comments from individuals and organizations interested in SNF PPS. HCFA acknowledged these concerns and reported that major analytical studies now under way might lead to future case-mix refinements. But given the urgent need for financial relief, these organizations were understandably disappointed.

The good news is that HCFA offered numerous clarifications that are important to front-line providers who have the daily responsibility for assessing Medicare patients and documenting their skilled care needs. For example, clarifications are offered in the definition of daily skilled care, the presumption of coverage and numerous other issues, as described below.

First, though, note the old saying, "The devil is in the details." Survival and, ultimately, success in the brave new world of SNF PPS demand relentless attention to many details (some would say too many details). Nurses must now select the "optimal" assessment reference date, count minutes of "delivered" therapy, count minutes of "expected" therapy, carefully "look back" to certain services delivered in the hospital setting and continue to assess and document the daily skilled care needs of patients. Because many of the fundamental details of SNF PPS were unclear as the system was implemented or as interpretations were changed over the past year, the final rule now provides clear guidance on several policy issues. These must be operationalized immediately by facility staff.

Although several of the important policy clarifications are highlighted below, careful review of the final rule is needed to identify and then implement each policy clarification.

* Initial period of coverage

Although initially many SNFs believed that a prospective payment system would provide guaranteed coverage for the full interval between assessments and that daily assessments of skilled needs were unnecessary, HCFA's clarification in Transmittal 405 asserted that daily assessments of skilled care were still necessary. In the final rule, HCFA explains that a patient who qualifies for a RUG group is considered to meet the SNF level of care requirements up to and including the assessment reference date of the first assessment. This means that if a patient qualifies for one of the upper 26 RUG groups, then the SNF will have presumed Medicare skilled care coverage for up to 8 days. While providers had hoped for a longer period of presumed coverage, this final rule does provide the clarity that admission nurses need to be able to classify and admit patients, knowing that they might have at least 8 days of Medicare SNF care.

* Examples of skilled nursing and rehabilitation services

In the interim final rule, HCFA eliminated several "examples" of skilled care when implementing the RUG model of care. However, long-term care providers sought to have these examples restored in order to justify daily skilled care, particularly at the end of stay. HCFA concurred, and the final rule restores and refines these examples of skilled care below:

* Overall management and evaluation of the care plan

* Observation and assessment of the patient's changing condition

* Patient education services

* Insertion and irrigation of suprapubic catheters

Anecdotally, many long-term care providers felt that the coverage criteria had been too restrictive and their ability to apply clinical judgment had been eliminated. Hopefully, the restoration of these examples will allow Medicare patient days to return to pre-PPS levels.

* MDS clarifications

Although the MDS was a familiar care-planning document to nurses prior to SNF PPS, it took on new meaning under SNF PPS. All nurses and other clinical staff must have a clear understanding of the following policy issues in order to effectively operate under SNF PPS:

Grace days: HCFA has clarified that all 8 days of the first assessment, including the grace days, are acceptable as the assessment reference date. Further, HCFA clarifies that they expect that many patients falling into the rehabilitation groups will have assessment reference dates falling on grace days. Nevertheless, HCFA does discourage the routine use of grace days for every Medicare admission.

Other Medicare Required Assessment (OMRA): HCFA has clarified that an OMRA is required 8 to 10 days after all rehabilitation therapy is discontinued. An OMRA is done only for those residents who continue to receive a skilled level of care. HCFA explains that if a beneficiary remains in skilled care following rehabilitation therapy, there must be a documented clinical reason for this continued stay. Use of 14-day look-back: HCFA clarified that the use of a "look-back" period in making RUGs-III assignments is considered a clinical proxy of the need for skilled care. There had been some concern about using a look-back period in qualifying a person for skilled care, when the service that was captured during this look- back period was discontinued prior to admission to the SNF (such as an IV medication administered in the previous 14 days). Providers should now feel comfortable using the look-back period to qualify patients for skilled care.

* Delay in new MDS Section U requirement

HCFA had intended to impose a new requirement for the collection of patient-specific medication information in a new MDS section, now referred to as Section U.

HCFA is now in the process of streamlining this section of the MDS to minimize the burden on SNFs, and the requirement has therefore been delayed until October 1, 2000.

* Therapy clarifications

The final rule contains many clarifications regarding the provision and tracking of therapy services under SNF PPS. However, two issues warrant specific mention. First, HCFA is requiring a physician signature on the plan of treatment prior to billing Medicare for these services (fax signatures are acceptable). In addition, HCFA has clarified that actual minutes of therapy provided should be recorded; these minutes should not be rounded up to intervals of 10 or 15 minutes.

* New payment rates for October 1, 1999

As required annually by statute, HCFA has announced that the update to be applied to payments during this period will be 2.1%. HCFA has also recalculated the federal rates using the same methodology as described in the interim final rule. As a practical matter, this has resulted in a small increase in the applicable urban and rural federal rates.

Moving Forward

SNF PPS, although implemented within an overall regulatory environment that has been hostile to providers, demands a thorough understanding of the final rule. All facility staff and administrators should carefully review the final rule in order to understand the nuances of HCFA's policies. Actual copies of these regulations as published in the Federal Register can be obtained on the Web site of the Government Printing Office: www.gpo.gov.

Jade Gong, RN, MBA, is a senior advisor to the Health Dimensions Consulting Group, headquartered in St. Paul, Minn. HDCG offers PPS-focused operational assistance to long-term care providers. She can be reached at [phone].