Medicare Compliance & Reimbursement

Feds show no signs of slowing new PPS implementation.

Long-term care providers should not let early assurances about "budget neutrality" give them a false sense of security about pending changes to Medicare reimbursement. Without careful long-term planning, the switch could derail care and cripple cash flow.

Speaking at the most recent SNF/Long-Term Care Open Door Forum, federal officials assured listeners that they would move ahead swiftly to implement the prospective payment system refinements. The changes are spelled out in a final rule published Aug. 4 in the Federal Register.
 
Some individuals and groups who commented on the proposed rule last month suggested that the agency delay implementing some of the rule's major changes, including the adoption of nine additional Resource Utilization Groups, reported Centers for Medicare and Medicaid Services official Sheila Lambowitz during the forum.

But, for the most part, CMS is pressing on. The agency met earlier this month with software vendors scrambling to update their products to meet the Jan. 1 implementation date for adopting the new RUG categories, announced CMS' Lori Anderson.

Exception: The feds are allowing added time to phase in another change spelled out in the final rule, a major shift to a new method of determining wage-index adjustments to SNF PPS rates.

"We were concerned about facilities that would see lower rates," commented Lambowitz. To allow facilities to transition to the system, from Oct. 1 through the end of the year, the feds will adjust rates by applying a 50/50 combination of the old Metropolitan Statistical Area method and the newly adopted core-based statistical area method.

After Jan. 1, CMS will adopt the CBSA method fully for nursing homes. Look for Change Request 3972 for clarification on the transition to the CBSA method, advised CMS official Jason Kerr.

The bottom line: Fiscal year 2006 should be a "budget neutral" year for most facilities. The real test will be how well providers adjust to PPS changes for fiscal year 2007. CMS has given providers a cushion to soften the effect of the end of add-on rates. Fiscal year 2007 will be the first full year providers will have to contend with the new system, with no guarantee of a full market-basket adjustment for inflation, as CMS granted for FY 2006.