Will the New Law Be the Last "Giveback"?

Maybe the Medicare "giveback" legislation will be the final word on whether reimbursement is adequate to ensure quality care. Or maybe it won't, given the passel of regulations--in healthcare dealing with work-site ergonomics and medical record keeping/Privacy--fired off in the final weeks of the Clinton administration.

Despite the uncertain future in the new Bush administration over such regulations, providers were nonetheless ecstatic as 2000 came to a close (and this column went to press) over enactment of the Medicare law formally known as the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000. The new law is estimated to provide $1.6 billion over five years for skilled care, in the process hopefully undoing the havoc wrought by the 1997 Balanced Budget Act.

Among the changes affecting the Prospective Payment System, providers would get the full market-basket adjustment in fiscal 2001 and the market-basket increase minus 0.5% in fiscal 2002 and 2003. These amounts would be on top of the temporary increases under the 1999 balanced budget restoration law. Also, the 2000 law limits the SNF consolidated billing requirement to stays covered by Medicare Part A and Part B therapies and extends the moratorium on the physical therapy and occupational therapy caps through 2002.

Clearly the question of adequate staffing will emerge in the years ahead. One provision in the new law increases the nursing component of each RUG by 16.66% over previous law, for SNF care furnished after April 1, 2001, and before October 1, 2002. The congressional General Accounting Office (GAO) would be required to conduct an audit of nurse staffing ratios in a sample of SNFs and to report results to Congress by August 1, 2002, and recommend whether the additional 16.66% payment should be continued.

More heat will be generated by the staffing issue when some industry officials try to get Congress to undo the following provision in the new law: Medicare and Medicaid nursing facilities will be required to post nurse staffing information daily for each shift in the facility, effective January 1, 2003.

Nursing home providers fought this provision on the grounds that a number is an unfair way for consumers to compare facilities, because it fails to take case mix into account. Although they were unable to scuttle the provision when it went through Congress, providers were able to obtain an effective date that allows for a congressional revisit long before implementation.

Another provision would permit the Department of Health and Human Services (HHS) to establish a process for geographic reclassification of SNFs based upon the method used for inpatient hospitals, which incorporates local labor costs in calculations of Medicare payments. HHS might implement the process upon completion of the data collection necessary to calculate an area wage index for SNF workers. Meanwhile, it looks as though the days are numbered for the RUG system used to calculate Medicare prospective payments. By July 1, 2002, the GAO would be required to submit a report to Congress on the adequacy of Medicare payments, taking into account the role of private payers, Medicaid and case mix on the financial performance of SNFs and including an analysis, by RUG classification, characterizing the performance of such facilities. The law would also require HHS, by January 1, 2005, to submit a report to Congress on possible alternatives to RUG classification.