Nursing home operators howl as government proposes slashing Medicare payments by $1 billion

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Nursing home company reaches $2.7 million settlement in therapy billing case
Nursing home company reaches $2.7 million settlement in therapy billing case
The Centers for Medicare & Medicaid Services set off a backlash from nursing home operators late Friday afternoon when it proposed “adjustments” that would cut Medicare payments by $1.05 billion in fiscal 2010. The 3.3% reduction will “largely” be offset by a 2.1% market basket increase, officials said.

Regulators stressed they would be simply closing a four-year window in which providers were paid far more than originally forecasted after a 2006 payment adjustment for certain therapy groupings. Providers, however, claimed the cut would be working against the spirit of the recently passed economic stimulus bill, endangering resident care and causing thousands of caregiver job losses.

"Implementing this old Bush Administration Medicare regulation will undermine seniors' future access to quality care in the setting of their choice” and “sidetrack our sector's ongoing ability to create good-paying health jobs,” said Bruce Yarwood, president and CEO of the American Health Care Association (AHCA)..

Although the announcement might have been a surprise to some, federal regulators had made no secret of their desire to “correct” the payment levels. Also, just two days before the CMS proposed rule came out, the AHCA ally the Alliance for Quality Nursing Home Care released a study of its own, claiming that, contrary to many reports, economic conditions were restricting nursing homes' access to capital, thereby causing widespread negative ripple effects.

Besides recalibrating and updating skilled nursing facility PPS rates for fiscal 2010, the rule also would propose a revised case-mix classification methodology (RUG-IV) and implementation schedule for fiscal 2011. It would take into account staff-time data derived from “the recently completed Staff Time and Resource Intensity Verification (STRIVE) project.” It also would ask for comment on a possible new requirement for the quarterly reporting of nursing home staffing data. The agency is accepting public comments on the proposals until June 30. More can be found here.