What a relief.

Congress mulls revisions to SNE Medicare payments

WITH MOMENTUM BUILDING ON CAPITOL HILL, skilled nursing facilities are likely to get some much-needed relief from payment cuts resulting from the prospective payment system within the next few months. At press time in early July, Representative William Thomas (R-Calif.), chairman of the House Ways and Means Subcommittee on Health; Representative Phil English (R-Pa.); and Senator Orrin Hatch (R-Utah), a member of the Senate Finance Committee, were said to be planning to introduce bills that would provide interim adjustments to PPS.

Industry observers expected that the bills would seek to modify the RUG III classification system used to establish payments under PPS, providing higher payments for certain categories of high-cost patients. Thomas is thought to be leaning toward a "RUG multiplier" that would boost payment for particular RUG categories by a certain percentage; Hatch is likely to introduce a similar bill. English is more likely to seek targeted modifications addressing nontherapy ancillary costs, such as respiratory care or pharmaceutical services.

The anticipated legislative action follows several months of mounting pressure from the trade associations Medicare experts, and lawmakers. In May, 66 senators sent a letter to federal Health and Human Services Secretary Donna Shalala expressing concerns about the impact of PPS on nursing facilities and urging the administration to modify the system. A month later, the Republican and Democratic leaders of the House and Senate delivered a similar letter to the White House. And in June, Gail Wilensky, chair of the Medicare Payment Advisory Commission, testified during a hearing before the Senate Finance Committee that there is a need for targeted relief for SNFs. "The problem is not with the PPS by itself, but the mismatch between payments and costs for patients who require relatively high levels of nontherapy ancillary services and supplies," she said.

Industry association leaders have commissioned studies to bolster their arguments. An analysis released in June, commissioned by the American Health Care Association and conducted by Muse & Associates of Washington, D.C., concluded that SNFs have experienced an average reduction in their Medicare payments of $50 per day per patient, a 15 percent decline in average per diems. It also found the SNFs have a 10.5 percent reduction in Medicare days. Taken together, these finding suggest that total Medicare payments to SNFs have already decreased by 24 percent and will reach $2 billion per year--significantly more than the $1.3 billion per year the Congressional Budget office had originally predicted would be saved under PPS.