WASHINGTON – The U.S. Centers for Medicare and Medicaid Services (CMS) last week announced rate adjustments for fiscal 2009 that will increase reimbursements for long-term care hospitals by 2.7 percent effective July 1, but cut nursing home payments by about 0.3 percent.
The latter adjustment is the difference between a roughly 3.1-percent overall increase in rates to reflect inflation, and a roughly 3.3-percent reduction in reimbursements because CMS is changing the way it estimates the extra cost of treating very sick patients in nursing homes.
Nursing homes are paid based on a system called the Skilled Nursing Facility Prospective Payment System, which uses “resource utilization groups” to help determine the daily payment rate. The groups reflect a patient’s severity of illness and the kind of services he or she requires, known in the industry as “case mix.”
In 2006, CMS expanded the use of that payment model and adjusted the case-mix indices to better reflect the cost of caring for medically complex patients. Nursing homes have been paid based on the adjusted case-mix forecasts since the beginning of 2006.
The adjustments were meant to be budget-neutral, however, but they actually resulted in increased Medicare expenditures, CMS said, as an unexpectedly high number of patients – more than 30 percent, vs. the projected 19 percent – were classified in a high-cost group.
CMS now wants to recalibrate the case-mix weights, moderating the size of the extra payments for very sick patients, to “re-establish budget neutrality on a prospective basis,” the agency said in a news release. In addition, CMS wants to adjust the second part of the 2006 changes that covered non-therapy ancillary services.
“In this manner, payments going forward would reflect the intent of the refinements, and payments to providers would more accurately and better reflect the service needs of Medicare beneficiaries,” the news release says. “CMS would also then have in place an accurate and more precise baseline which it could use in anticipation of any additional program enhancements that may be made in future years.”
The proposed changes for fiscal 2009 will cut payments to nursing homes by $770 million, or 3.3 percent, CMS said, but that cut will be mostly offset by the proposed update to Medicare payments overall, which will raise reimbursements by 3.1 percent, or $710 million. As a result, nursing homes will see payments decrease by a net $60 million, or 0.3 percent, CMS said.
The long-term care hospital adjustment, meanwhile, affects nearly 400 facilities nationwide that treat some of Medicare’s most severely ill or medically complex patients.
“The policies we are announcing today will help to ensure access to high-quality services in an inpatient setting for people with Medicare who are severely ill and who need long-term hospital-level treatment,” CMS Acting Administrator Kerry Weems said in a news release. The payment increase, he added, “provides incentives to LTCHs to continue to provide compassionate, efficient care to some of Medicare’s most severely ill patients, while helping to preserve the solvency of the Medicare Hospital Trust Fund for future generations.”
Payments will increase by 2.7 percent from the 2008 rate established by Congress in the Medicare, Medicaid, and SCHIP Extension Act of 2007. Aggregate payments for the year are estimated at about $4.47 billion, a $110 million increase over fiscal 2008.
The affected hospitals have an average Medicare inpatient length of stay greater than 25 days, and provide extended medical and rehabilitative care for patients with clinically complex conditions, including such services as weaning from ventilators so they can breathe without assistance, pain management and rehabilitation.
Medicare pays the hospitals a single, predetermined amount under a prospective-payment system based on the patient’s diagnosis and the severity of the patient’s condition.
The U.S. Centers for Medicare & Medicaid Services (CMS) is an agency of the U.S. Department of Health and Human Services. For more information, go to www.cms.hhs.gov.
