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Medicare Compliance & Reimbursement

Long-Term Care:

HOW THE REVAMPED MEDICARE WILL IMPACT SNFs

Published on Mon Dec 22, 2003

President Bush has signed into law the largest Medicare overhaul in history - and it's time for skilled nursing facilities to prepare for the fallout.

SNFs have won some tough battles: The Medicare Prescription Drug, Improvement and Modernization Act immediately renews a two-year moratorium on therapy caps and more than doubles the reimbursement rate for AIDS-related skilled care.

But providers and their legal counsel still are wading through the hundreds of pages that spell out the Act's finer points. The consensus so far: Despite the magnitude of the historic legislation, it's not likely to rock nursing homes' world.

"There's little else in the bill that directly benefits SNFs," summarizes Marie Infante, an attorney with Mintz, Levis, Cohn, Ferris, Glovsky & Popeo in Washington. But SNFs can't ignore the legislation altogether: "There are a few aspects of the legislation that affect nursing facilities in relatively minor ways," says Susan Kayser, an attorney with New York City's Duane Morris.

The devil could be in the details, so providers should be diligent in sorting out the ways in which the Medicare Act could touch their businesses and affect their ability to provide care. Providers should pay close attention to the following provisions, experts agree:

  • Therapy caps. This big win means beneficiaries can receive physical, occupational and speech therapy services provided under Medicare Part B beyond the two $1,590 caps in place since September 1. Though it stops short of slaying the caps altogether, the Act nixes the limits for two years. According to the Congressional Budget Office, the shift stands to bring about $700 million back to the industry.

  • Reimbursement for AIDS-related care. This apparent victory - a 128-percent bump up in the AIDS-related RUG base rate - may in reality have little impact, suggests Christine Hurley, administrator of the not-for-profit Bailey-Boushay House in Seattle, which specializes in caring for individuals with AIDS. "A 128-percent increase doesn't make it," says Hurley. She notes the average daily drug costs for Bailey-Boushay residents average $400 to $600 alone.

    Still, the average provider may find some shelter in the increased rate, particularly in light of recent charges of discrimination against prospective HIV-positive residents.

    The new rate will be effective for services rendered on or after October 1, 2004, with the provision sunsetting when the RUG system is revamped to include such costs, explains Dawn Segler of the Tallahassee, FL, office of Moore Stephens Lovelace, an accounting and management firm.

  • Physician fee schedule. In the current fiscal year, providers will see a 1.5 percent increase in physician fee schedules, which are used for establishing payment for Part B services. The increase is good news, particularly since providers expected a 4.5 percent cut. An additional rate increase of 1.5 percent is promised for 2005, replacing another proposed cut.

  • Drug coverage. One area that's likely to command providers' attention in coming years, as prescription drug coverage under Medicare is phased in: changes in the way drugs are provided and paid for in nursing homes, particularly if a resident is not in a covered Part-A stay.

    It's not clear at this point how relationships will change, offers Barbara Gay, director of information for the American Association of Homes and Services for the Aging. For example, it's unclear at this point whether the nursing home pharmacy has to join the managed care plan, she points out.

  • Disease management. Providers that stress disease management may benefit from a provision in the Act calling for disease management demonstrations and the coverage of certain preventive services, observes Infante.

  • The appeals process. Look for changes in the way you can appeal certain Medicare decisions, warns Infante. One revision: The Act requires a health plan to transfer appeals to administrative law judges with the Department of Health and Human Services rather than the ALJs with the Social Security Administration. Though the industry still is homing in on the details of just how things will change, Infante predicts many headaches for providers under the new appeals process.

    "The administrative appeals process could become much more adversarial in nature than it already is, particularly on the reimbursement side," predicts Infante.

    The act also clarifies that CMS may retroactively apply substantive changes in rules, manual sections and policies and other guidance publications, as long as the HHS secretary determines that doing so is in the public interest, according to a summary from the Washington law offices of McDermott Will & Emery.

  • More "administrative simplification." Federal officials may well be pondering this oxymoron, particularly given the departure of Centers for Medicare & Medicaid Services chief Tom Scully and the subsequent announcement of the possible resignation of HHS Secretary Tommy Thompson.

    Key provisions under this heading include combining the functions of fiscal intermediaries for Part A and carriers for Part B and creating a new breed, Medicare Administrative Contractors (MACs), that will have combined authority, according to McDermott Will & Emery.

    In addition, the Act effectively tightens the reins on CMS, creating new performance standards for the agency.

    That means CMS can't drag its feet any longer when it comes to issuing regulations, at least not without a good excuse. The agency can't let three years elapse from proposed rule to final regulation unless it justifies publicly the reason for the delay. And new material can't be introduced in a final rule unless it is a "logical outgrowth" of what was originally proposed, the provision says.

    The full bill text is at http://thomas.loc.gov/cgi-bin/bdquery/?d108:h.r.00001:.

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