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2000 Monthly News
November

Elder Services Promotes Lillpopp, Adds Two New Staff
Elder Services awards $35,000 in federal funds for elder support services
New information on Alzheimer’s disease. By Jay Ellis, D.O., F.A.A.N.
Promotion of Nancy McCarthy to Residential Service Coordinator
Medicare to increase payments to nursing homes
Candidate views on Medicare

Medicare to increase payments to nursing homes

Medicare substantially increased payment rates to skilled nursing facilities effective October 1, 2000.

The increased payment rates for Medicare’s prospective payment system help insure that Medicare pays appropriately for the care of elderly and disabled beneficiaries requiring skilled nursing care.

"Nursing home residents deserve and expect access to safe, quality care, especially our country’s frailest and sickest beneficiaries," Health Care Financing Administrator Nancy-Ann DeParle said. "These changes will help to ensure that Medicare pays nursing homes fairly and appropriately when caring for the 39 million Medicare beneficiaries."

The Balanced Budget Act of 1997 (BBA) required that Medicare pay for skilled nursing home care following hospitalization based on a prospective payment system. Hospitals have been paid under a prospective payment system for inpatient services since 1983.

In fiscal year 2001, Medicare payments to nursing homes are projected to increase more than 20 percent over the current year’s projections. The updates are based on increases in the cost of covered care and provisions of the BBA and the Balanced Budget Refinement Act of 1999 (BBRA), which provided a 4 percent increase and also temporarily boosted payments for certain patients by 20 percent.

"We will continue our research to make sure that Medicare is paying appropriately for the skilled nursing care provided to beneficiaries, including those with serious health problems that require complex care and treatment," DeParle said. "Changes could be made as early as next year."

Under the prospective payment system, each facility receives a base payment amount adjusted for local wages and the clinical characteristics of individual payments. Covered costs include routine services such as room, board, nursing services, and minor medical supplies; ancillary costs such as therapies, drugs and lab services; and capital costs including land, building and equipment.

The payment system is designed to ensure better patient care by relating payments to the condition of the patient instead of a set amount per patient, recognizing that some patients need more services or more expensive care than others. Under the previous system, which based payment on nursing homes’ reported costs, the skilled nursing facility benefit was one of the fastest growing components of Medicare spending.

Under the final rule, Medicare would continue to pay higher rates for beneficiaries with more complex medical needs. Payments also would reflect geographic wage differences and a facility’s historical costs, as well as the BBRA adjustments. For some beneficiaries, Medicare would pay more than $500 per day for their skilled nursing care.

The prospective payment system has been phased in to ease the transition for nursing homes. During the first three years of implementation, the rate for a nursing home is determined by a blend of a facility specific rate and a federal rate. In the third year, which begins as early as July 1, 2000, for some nursing homes, the blend is 25 percent of the facility rate and 75 percent of the national rate. Nursing homes also have the option of being paid entirely at the federal rate, and all homes will be paid based on the federal rates starting in the fourth year.