Nursing homes attack Medicare's payment cuts

Medicare announced a change in nursing home payments Friday, according to news coverage.

The Associated Press/The Washington Post: "Medicare says it will cut payments to nursing homes to correct for an unintended windfall this year, and the industry is warning that quality will be compromised. Officials announced the 11 percent cut Friday, along with other changes meant to tamp down on physical therapy costs" (7/29).

Star-Telegram: "This year's new payment system left a billing code open that allowed nursing homes to bill for higher rates while providing the same service. Companies used that process to avoid lower revenue, according to Medicare" (7/29).

Bloomberg: "A billing provision in Medicare's new payment system brought the companies $2.1 billion in overpayments, according to a July report by the U.S. Department of Health and Human Services inspector general. ... Medicare wanted to clamp down on a practice allowing nursing homes to categorize patients as getting the most intense services that the program will pay for. ... The regulation issued yesterday shuts down that billing method, according to Medicare. It will also require nursing homes to report in more detail the therapies Medicare pays them to provide (Armstrong, 7/29).

The Wall Street Journal: "The decisions sent related facility operators' shares plummeting after hours, with Kindred Healthcare Inc. (KND) down 30% to $13.10, Skilled Healthcare Group Inc. (SKH) down 23% to $6.75 and Sun Healthcare Group Inc. (SUNH) off 43% to $4" (FitzGerald, 7/29).

McKnight's Long-Term Care: "'We are appalled that the Centers for Medicare and Medicaid Services chose to implement an 11.1% across-the-board rate cut for skilled nursing facilities in one year' said Larry Minnix, LeadingAge President and CEO. The American Health Care Association said the proposal 'makes reductions beyond what is necessary for budget neutrality.' CMS Administrator Donald M. Berwick, M.D. said the adjustments are part of an effort to pay skilled care operators "properly" in the next fiscal year" (7/29).

Modern Healthcare: "The CMS cut the payments to claw back estimated increased reimbursement in the current fiscal year that resulted from unintended changes in SNF Medicare billing for therapy, which had followed changes in how Medicare paid for therapy. The CMS in the rule said that it has recalibrated its payment structure, enacted through what it calls resource utilization groups, or RUGs, to correct the incentives that led to billing for higher-cost therapies" (Barr, 7/29).

The Hill: "Also on Friday, CMS announced modest payment increases for hospice and rehabilitation facilities. Medicare will pay inpatient rehabilitation facilities roughly 2 percent more next year, at a cost of around $150 million. The regulation setting those rates also establishes a new quality-reporting program for rehabilitation facilities. Hospices will see a 3 percent increase in Medicare payments, mostly to cover the rising cost of providing care" (Baker, 7/29).