MEDICARE HOME HEALTH AND SNF PAYMENT CHANGES

The Balanced Budget Act of 1997 included provisions that seek to reduce spending by changing the method of Medicare payments to both Home Health Agencies and Skilled Nursing Facilities (SNFs). Both are moving to Prospective Payment Systems (PPS) under which they will be paid a lump sum per patient rather than fee for service. So if patients tell you they are concerned that their services are going to be cut, this may be why.

In the home care arena, the PPS is scheduled to take effect October 1, 1999. As part of a phase-in an Interim Payment System (IPS) went into effect in October. As reported in the Boston Globe, the formula used to determine reimbursement represents "cuts (that) amount to a 2 percent reduction from 1994 reimbursement levels. But because per-patient expenditures have grown rapidly since then, the cuts represent a 22 percent decrease from 1997 levels, according to industry estimates." The argument for why patient expenditures has increased is that patients are being discharged quicker and sicker, and home care has been picking up care that used to be provided in hospitals. Advocates have stated concerns that older, sicker and poorer patients will be hurt the most by these cuts. Concern has also been voiced that this will lead to more institutionalization, and increased costs to the state through MassHealth. There are currently legal and legislative challenges to the cuts that are unfolding as we go to press.

Another change in home health is that the need for venipuncture alone no longer qualifies a patient for the array of additional home care services such as home health aides. In addition charges for venipuncture are being shifted to Medicare Part B, so those who don't have Part B will no longer have coverage for home blood draws.

Similarly, SNFs are scheduled to move to a PPS on or after July 1. Initially 1995 facility-specific average per-day patient costs will be blended with national averages. By 2001 SNFs will be paid based solely on the national average per-day patient cost with some adjustments. Some analysts expect hospital-based SNFs to be especially hard-hit as their costs tend to be higher and the formula for determining payments will be weighted towards the lower costs per patient-day of freestanding SNFs. The American Hospital Association believes that this doesn't take into account the needs of the more medically complex population in hospital-based SNFs. HCFA is expected to issue an interim final rule on the new payment system shortly. Information from AHA News

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