AHCA Provides Additional Analysis of SNF Proposed Rule

VHCA (5/16/2008)

On May 1, 2008, the Centers for Medicare & Medicaid Services (CMS) issued the proposed rule for the skilled nursing facility (SNF) prospective payment system (PPS) FY 2009 update: Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2009.  The proposed rule has been published in the Federal Register (73 Federal Register 25918).   Comments are due to CMS no later than 5 pm on June 30, 2008.  Members wishing to provide input to the American Health Care Association for consideration and inclusion in their comments should contact Elise Smith no later than June 6th.

CMS estimates that net Part A payments to SNFs will decrease by about $60 million in fiscal year (FY) 2009 (about 0.3% or about 89¢ per patient day) due to proposed recalibration of the case-mix adjustment that will reduce payments by an estimated $770 million, which would be offset by the proposed market basket increase. The proposed rule recommends a full market basket increase of 3.1% beginning October 1, 2008, which CMS estimates would increase SNF payments by approximately $710 million in FY 2009. CMS proposes to recalibrate the parity adjustment factor and the non-therapy ancillary services adjustment first implemented and used to establish budget neutrality with Resource Utilization Group (RUG) refinement in FY 2006.  CMS estimates that this recalibration will reduce payments to SNFs by approximately $770 million.

CMS has postponed the application of the results from STRIVE (the Staff Time and Resource Intensity Verification Project) that began in the fall of 2005.  CMS intends to introduce new case-mix weights in FY 2010 that will reflect STRIVE analysis and findings and any changes to the RUG classification structure.

National and state long term care leaders released a new analysis of the Bush Administration’s $770 million cut to Medicare-financed nursing home care, and warned the regulatory-driven cuts not only jeopardize seniors’ access to quality nursing home care -- particularly in rural areas -- but also present a clear and present danger to the U.S. economy and the state and local caregiver jobs base.

The AHCA analysis indicates that the RUGs recalibration adjustment included in the proposed rule would lower Medicare SNF payment to Virginia nursing facilities by $18.5 million in federal fiscal year 2009 or about $10.59 per Medicare patient day.

During a press teleconference to release the study analysis as well as new state-by-state impact analysis from AHCA, Al Dobson, a Lewin Group consultant, said the so-called “Forecast Error” represents a net negative total economic impact of $4.5 billion for FY 2009. In addition, the data finds, the $770 million decline in revenue will impact approximately $1.8 billion in wages, 43,530 jobs and approximately $661 million in federal, state and local tax revenue in the first year.

“In rural communities, where nursing homes are among the largest employers, the negative economic effects would be particularly damaging,” Dobson observed. “Policymakers must understand and reconcile the dual dimensions of these Medicare cuts in that they not only directly impact seniors’ access to quality nursing home care, but also have a negative ripple effect throughout our national, state and local economies.”

VHCA members are encouraged to review the provisions contained in the proposed rule and evaluate the potential impact of the rule’s funding cuts on facility operations.  Members with questions should contact Hobart Harvey or by phone at 804.212.1695.