[Congressional Record Volume 143, Number 89 (Monday, June 23, 1997)]
[Senate]
[Pages S6094-S6095]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SKILLED NURSING FACILITIES PROSPECTIVE PAYMENT ACT OF 1997
Mr. HATCH. Mr. President, on June 16, 1997, I introduced legislation,
S. 914, proposing to revise the present system in which the Medicare
Program pays for services provided by skilled nursing facilities
[SNF's]. This legislation builds on my work in the Finance Committee in
1995 when the committee included a proposal I authored to implement a
prospective payment system for nursing home payments.
As currently structured under Medicare, seniors receive up to 100
days of skilled nursing facility services following a 3-day
hospitalization stay. Currently, those services are reimbursed on a
cost-plus basis. As Medicare has evolved, however, so have systems of
cost-plus reimbursement.
For many years, I have worked with my colleagues in the Senate to
provide seniors with the services they need in a skilled nursing
facility setting. I have worked to modify the Medicare reimbursement
methodology in order to provide economic incentives to SNF providers to
provide the highest quality of care at a reasonable and affordable
price to the Medicare Program.
My legislation will accomplish that goal.
Congress initially began requiring prospective payments for skilled
nursing facilities in the early 1980's. However, the Health Care
Financing Administration [HCFA] has not been able to identify an
appropriate payment methodology, and how best to define the services
provided to seniors in a comprehensive way. Nevertheless, we have come
a long way since the mid 1980's in understanding the proper
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structure of prospective payment systems. We are now on the verge of
fundamentally revamping the current cost-plus payment system for these
important services.
Let me briefly describe the key parts of my legislation.
First, during fiscal year 1998, the Health Care Financing
Administration will begin phase one of a per diem, prospective payment
system [PPS] for skilled nursing facilities. Such payment would be
based on historical data regarding a particular facility's costs and
services provided. While it is expected that the new rate is an all-
inclusive rate, encompassing routine costs, ancillary services, and
capital-related expenses, during the first year, HCFA is likely to
adjust both the inclusion of ancillary services and capital costs only
when they have sufficient data to adequately measure and quantify the
level of those services.
It would be unfortunate for HCFA to put into effect a system that did
not adequately account for the medical services offered to residents
within a skilled nursing home. I urge HCFA to implement and include all
ancillaries only when the data and the information are adequate.
Second, during the 4 four years the prospective payment system will
evolve into a full PPS system where the services for an individual in a
skilled nursing facility bed will be adjusted for their medical and
nursing needs. This legislation calls on HCFA to develop a case-mix
methodology that adequately reflects the medical needs of each patient.
I have heard from many experts that the current case mix methodology
does not adequately reflect certain medical needs of many skilled
nursing home patients. It is my intention that the case-mix methodology
be current and reflect all services provided.
And third, once this system is in place, it will provide the right
kind of economic incentives so that providers will seek all services
medically necessary. The Medicare Program will not be in a situation of
overpaying for such services; it will provide a competitive balance so
that all skilled nursing services, regardless of whether they are
hospital SNF beds or freestanding SNF beds, will have comparable
incentives to provide high quality services to beneficiaries.
It is extremely important that we change the existing and limited
incentives in the Medicare system so that providers will offer services
in the most cost-effective way. Hospitals are already under a PPS
system; physicians are reimbursed on a predetermined rate as well. This
approach is now the next important step in our continuing effort to
ensure appropriate fiscal responsibility by the Federal Government
while also ensuring that seniors have access to the important health
benefits offered under the Medicare Program.
Mr. President, for the benefit of my colleagues, I have prepared a
section-by-section summary of my bill and I ask unanimous consent that
it be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Section-by-Section Analysis
Establishes a prospective payment system for skilled
nursing facility (SNF) services and provides for consolidated
billing of Part B services provided to residents of such
facilities.
Subsection (a): Provides for the establishment of a
prospective payment system for services covered by the
Medicare skilled nursing facility benefit, including routine
service, ancillary services (except diagnostic services), and
related capital costs, beginning with cost reporting periods
starting on or after July 1, 1998. Payment would be based
on per diem rates established by the Secretary of Health
and Human Services.
Provides a four-year transition period for shifting the
calculation of payments rates from facility-specific historic
cost data to average national or regional costs. During the
first year of the new system, payments would be based on
facility-specific per diem rates. For the second through
fourth years, payments would be based on a blend of facility-
specific and federal rates. In the fifth year and thereafter,
payments would be based exclusively on federal per diem
rates.
Payments to new facilities would be based on federal per
diem rates.
Federal per diem rates would be determined by the Secretary
on the basis of 1995 cost data for all SNF settings and would
include an estimate of amounts that would be payable under
Part B for services furnished to SNF residents. Rates would
be adjusted by variations in wage levels and case mix and
could be computed separately for urban and rural areas based
on national or regional classification. Rates would be
updated annually by the skilled nursing facility market
basket index.
Federal payment rates would be applied to individual
facilities subject to adjustments for case mix and geographic
variations in labor costs. A method of making adjustments
based on case mix variations would be required to be
developed by the Secretary in the form of a regulation
subject to public notice and comment.
SNFs would be required to provide to the Secretary with
resident assessment data as may be necessary to develop and
implement per diem rates.
The Secretary would be required to develop an appropriate
method of applying a prospective payment system to Medicare
low volume SNFs and swing bed hospitals.
Subsection (b): Provides for consolidated billing of most
Part B services furnished to residents of a skilled nursing
facility, including services provided by other entities under
arrangement. Claims for such services would be required to be
submitted directly by the SNF and include a code or codes
identifying the items or services delivered. Payment would be
made to the SNF based on the Part B payment methodology (such
as fee schedules) applicable to the particular item or
service. Facilities would be permitted to reassign such
payments when the item or service was furnished by another
entity. Payments for therapy services would be required to
reflect the new salary equivalency guidelines for physical,
occupational, and respiratory therapy and speech-language
pathology after such guidelines are finalized through the
regulatory process.
The Secretary would be required to establish a medical
review process to examine the effects of the changes made by
the Act on the quality of skilled nursing facility furnished
to Medicare beneficiaries.
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