[Congressional Record Volume 144, Number 151 (Wednesday, October 21, 1998)]
[Senate]
[Pages S12876-S12877]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  SENATE RESOLUTION 314--EXPRESSING THE SENSE OF THE SENATE REGARDING 
                       SKILLED NURSING FACILITIES

  Mr. HATCH submitted the following resolution; which was refered to 
the Committe on Finance:

                              S. Res. 314

       Resolved,

     SECTION 1. SENSE OF THE SENATE REGARDING AUTHORITY OF 
                   SECRETARY, COLLECTION OF DATA, AND REPORT TO 
                   CONGRESS.

       (a) Authority.--It is the sense of the Senate that the 
     Secretary of Health and Human Services, in making payments 
     under the prospective payment system for skilled nursing 
     facilities pursuant to section 1888(e) of the Social Security 
     Act (42 U.S.C. 1395yy(e)), has the authority under section 
     1888(e)(4)(G)(i) of such Act to provide for an appropriate 
     adjustment to account for case mix which reflects a patient's 
     medical needs requiring the provision of non-therapy 
     ancillary services (such as respiratory therapy, pharmacy, 
     laboratory, X-ray, and parenteral and enteral services, and 
     covered durable medical supplies).
       (b) Data.--It is the sense of the Senate that the Secretary 
     of Health and Human Services should gather sufficient data on 
     the provision of non-therapy ancillary services by skilled 
     nursing facilities that are paid under the prospective 
     payment system pursuant to section 1888(e) of the Social 
     Security Act in order to develop the appropriate adjustment 
     for case mix under section 1888(e)(4)(G)(i) of such Act.
       (c) Report to Congress.--It is the sense of the Senate that 
     the Secretary of Health and Human Services should 
     periodically report to Congress on the development of the 
     appropriate adjustment for case mix under section 
     1888(e)(4)(G)(i) of the Social Security Act which reflects a 
     patient's medical needs requiring the provision of non-
     therapy ancillary services.

  Mr. HATCH. Mr. President, today I introduce S. Res. 314 which 
expresses the sense of the Senate regarding the authority of the 
Secretary of Health and Human Services to make adjustments in payments 
made to skilled nursing facilities under the Medicare program.
  As my colleagues are aware, pursuant to the Balanced Budget Act of 
1997, Congress directed the Health Care Financing Administration to 
create a new prospective payment system, or PPS, for Medicare-certified 
skilled nursing facilities, or SNFs, as they are called.
  Skilled nursing facilities are now in the process of moving from the 
historical cost-based reimbursement system to the new prospective 
payment system.
  This new system combines costs associated with nursing services, 
capital investment, and other medical services bundled together and 
then adjusted to reflect the needs of the patients.
  Congress rightly sought this new system as a way of getting skilled 
nursing facility operators to manage both the quality and costs of 
health care for seniors qualified under Medicare.
  As this system has been developed quickly since the enactment of the 
BBA, there has been a problem identified with adjustments for services 
considered ``non-therapy'' services.
  These include respiratory therapy, pharmaceutical products, 
parenteral and enteral products, laboratory and x-ray services, and 
other covered medical supplies.
  While I believe that HCFA has done a remarkable job in getting this 
system in place over the past year, I am concerned that the adjustment 
in payment for these specific services has not yet been developed.
  This is especially true for a patient who is very ill--those with 
multiple disease conditions treated in a SNF. There is simply not 
adequate provisions for ensuring that the prospective payment made each 
day appropriately reflects the higher medical costs that these patients 
may need.
  As a result of this new system, many nursing homes cannot afford to 
treat certain types of patients. That was never our intent.
  HCFA officials have acknowledged that they needed more data to fix 
the problem. They commissioned a study last year to assist them to make 
corrections.
  However, the data was not yet available in time for the first year to 
implement some corrections. While I am certain that HCFA will correct 
this system, I want to ensure that services to our most vulnerable 
seniors in nursing homes getting complex medical services will continue 
to get their care.
  I do not want bureaucratic delays in any way to impede their care.
  The PPS theory of paying according to average does not work when the 
rates are not based on solid data and the case-mix adjustment for non-
therapy ancillaries is based on very little data. This is obviously not 
what Congress intended with the BBA.
  In March, the Medicare Payment Assessment Commission advised the 
Congress that ``the RUG-III system may not adequately differentiate 
among Medicare SNF patients . . . this may lead to significant 
overpayment and under payment for patients within a RUG group.''

  In September, the Appropriations Committee report for the Department 
of Health and Human Services included the following:

       The Committee has heard concerns regarding the equity of 
     the new Medicare SNF prospective payment system as it relates 
     to nontherapy ancillaries. The demonstration upon which the 
     new system was based did not include this class of items and 
     services. Due to the lack of sufficient data to make these 
     changes, the new system may provide a windfall for some 
     providers while seriously impairing the ability of others to 
     treat patients requiring more intensive care. Therefore, the 
     Committee urges HCFA to reexamine this policy and make 
     budget-neutral changes this year to assure continued access 
     to services for high cost patients pending the gathering of 
     sufficient data on which to base permanent reforms.

  Mr. President, unless relief is provided and this anomaly in the 
payment system is corrected, a major impediment will remain for certain 
patients with high non-therapy ancillary costs to receive Medicare 
services in nursing facilities.
  An immediate transitional modification is needed before irreparable 
harm is done to quality care and access for high costs patients. Some 
facilities have already begun PPS coverage although HCFA apparently 
will not begin making actual PPS payments until December, or later. 
However, on January 1 about 60 percent of the SNFs will begin coverage 
under the PPS.
  We must, therefore, develop longer term solutions for these crucial 
services, but first we must do no harm in the interim.
  Providers can quickly change operations to maximize light care and 
minimize heavy care. Specialty staff, such as respiratory therapists, 
will be let go; special physical plant and equipment, such as air flow 
equipment for ``clean room'' level infection control will be 
dismantled; and hospital referral arrangements will be changed.
  Accordingly, I am submitting today S. Res. 314 expressing the sense 
of the Senate that the Secretary, pursuant to section 1888(e)(4)(G)(i), 
has the authority to provide for an appropriate adjustment to account 
for case mix which reflects a patient's medical needs requiring non-
therapy ancillary services.
  HCFA has acknowledged the shortcomings of the current RUG-III system. 
The RUG-III demonstration project had treated these costs as a pass-
through because the system did not have the data available to include 
such costs.
  My resolution will clarify and reaffirm Congressional intent that the 
Secretary has the administrative flexibility to make appropriate 
adjustments to the case-mix of SNFs to reflect the costs of these 
services.
  One approach, which accommodates HCFA's operational impediment of 
Year 2000 computer software problems, would be to make payment 
adjustments to reflect the relative resource utilization of non-therapy 
ancillaries by different patient types based on a SNF's cost report for 
the first year under the PPS.
  The resolution calls upon the Secretary to gather sufficient data on 
the provisions of non-therapy ancillaries in order to develop the 
appropriate adjustments. And, it also urges the Secretary to 
periodically report to Congress on the development of the appropriate 
adjustment.
  Mr. President, this issue is one of quality and access for America's 
seniors to community based skilled care.
  And, while it was my hope that the Senate could pass this resolution 
today, I trust my remarks and the language of the resolution will serve 
to further define the complex issues associated with this important 
matter.
  I am encouraged that the distinguished Chairman of the Finance 
Committee, Senator Roth, and the distinguished Minority Member, Senator

[[Page S12877]]

Moynihan, have indicated their interest, and look forward to working 
with them early next year to address this issue in the Finance 
Committee.

                          ____________________