Medicare Compliance & Reimbursement

Proposal would also nix inflation adjustment.

Medicare revenues for long-term care providers won't crash come October. But the reprieve delivered in a recent rule refining how Medicare pays nursing homes won't save providers in the long run without planning - and a careful review of the new rule.

"We're cautiously optimistic," offers Stephen Guillard, chairman of the Alliance for Quality Nursing Home Care. "But we will spend the coming days closely reviewing the proposed rule."

In the months preceding the proposed rule's posting May 13, providers feared the worst. The Medicare Payment Advisory Commission had recommended - for the second year straight - that Medicare rates for skilled nursing facilities not be adjusted at all for inflation.

In addition, MedPAC called for an end to temporary add-on payments that have compensated facilities in recent years for caring for certain clinically complex patients.

Proposed Cuts Could Take Big Chunk Of Funding

Taken together, the MedPAC recommendations would have left skilled nursing facilities reeling from a 12-percent reduction in Medicare reimbursement. Under that plan, losses to the industry would have been about $1.5 billion, notes Susan Feeney of the American Health Care Association.

The Bush Administration's fiscal year 2006 budget proposal added to the nursing home industry's concern by calling for Medicare cuts for skilled nursing care totaling $24 billion over 10 years.

Good news: The proposed rule paints a decidedly brighter picture for long-term care. By various means, the feds propose restoring most of the Medicare funding lost by the demise of the temporary add-ons.

Nursing homes would receive about $15 billion in Medicare payments in the coming fiscal year, approximating what they will have received from Medicare by the close of the current fiscal year, notes consultant Steve Jones, a principal with Moore Stephens Lovelace in Clearwater, FL.

For starters, a 3-percent increase for inflation would commence at the start of the next fiscal year, on Oct. 1. By itself, this increase should add back to nursing facilities' coffers about $510 million of the $1.5 billion.