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Medicare News
Medicare Announces Pay Hikes for Home Health Care,
Nursing Homes
July 31, 2006 – Home health agencies will get a 3.1
percent increase in Medicare payments for calendar year 2007, as will
nursing home facilities that furnish certain skilled nursing and
rehabilitation care to Medicare patients recovering from serious health
problems, according to proposals by the Centers for Medicare & Medicaid
Services.
The increase for nursing homes will be about $560
million and for home health agencies about $460 million.
Home Health Care
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“CMS is committed to the best possible care while
avoiding any unnecessary costs. High-quality care requires objective
information that doctors, patients, and everyone can use to get better
care,” said Mark B. McClellan, M.D., Ph.D., administrator of the Centers
for Medicare & Medicaid Services, which oversees the Medicare home
health payment system.
Medicare pays home health agencies through a
prospective payment system (PPS), which pays at higher rates to care for
those beneficiaries with greater needs. Payment rates are based on
relevant data from patient assessments conducted by clinicians as
currently required for all Medicare-participating home health agencies
(HHAs).
Home health payment rates have been updated
annually by either the full home health market basket percentage, or by
the home health market basket percentage as adjusted by Congress. CMS
establishes the home health market basket index, which measures
inflation in the prices of an appropriate mix of goods and services
included in home health services. Section 5201(c) of the Deficit
Reduction Act (DRA) of 2005 provides for an adjustment to the home
health market basket percentage update for CY 2007 and subsequent years
depending on HHAs submission of quality data.
HHAs collect and report Outcome and Assessment
Information Set (OASIS) data. For CY 2007, CMS proposes to evaluate
home health care quality by relying on the submission of 10 OASIS
quality measures that are currently being publicly reported through the
CMS Home Health Compare website. Continuing to use the current OASIS
instrument ensures that providers will avoid the additional burden of
reporting through a separate mechanism and the subsequent costs
associated with the development and testing of a new reporting
mechanism.
HHAs that submit the required quality data would
receive payments based on the full proposed home health market basket
update of 3.1 percent for CY 2007. If a HHA does not submit quality
data, the home health market basket percentage increase will be reduced
by 2 percentage points to 1.1 percent for CY 2007. Rural home health
agencies that participate in the ongoing quality measurement effort will
see an estimated 3.3 percent increase in payment, while urban agencies
who continue to provide quality data will experience an estimated 2.9
percent increase in payments.
To qualify for the Medicare home health benefit, a
Medicare beneficiary must be under the care of a physician, have an
intermittent need for skilled nursing care, or need physical or speech
therapy, or continue to need occupational therapy. The beneficiary must
be homebound and receive home health services from a Medicare approved
home health agency.
CMS is also proposing to revise the payment
methodology for oxygen equipment, oxygen contents and capped rental
durable medical equipment (DME). This proposed rule, which would
implement Section 5101 of the DRA, as well as other requirements
applicable to suppliers of oxygen, oxygen equipment, and capped rental
DME, would ensure that Medicare pays appropriately for these items, and
would reduce out-of-pocket costs for beneficiaries who pay a 20 percent
coinsurance on this equipment. These changes will improve value for
Medicare beneficiaries, while maintaining access to quality equipment.
“We want to make sure that our payments for oxygen
are appropriate to ensure beneficiary access to the latest technologies
and that we are not paying rental amounts that exceed the cost of
purchasing oxygen equipment many times over,” said Dr. McClellan.
The proposed rule provides for Medicare payment for
up to 36 months of continuous rental of oxygen equipment. After 36
months of rental payments, the supplier would transfer title of the
equipment to the beneficiary. Similarly, after a 13-month period of
continuous rental payments, the supplier would transfer title for capped
rental equipment to the beneficiary. The beneficiary would continue to
pay coinsurance of 20 percent of rental payments, but would no longer
pay coinsurance on the equipment after the transfer of title.
Medicare will continue to make monthly payments for
oxygen contents for beneficiary-owned equipment as long as the
beneficiary needs oxygen equipment. In addition, Medicare will pay for
reasonable and necessary maintenance and servicing of beneficiary-owned
oxygen equipment and capped rental DME not covered by a supplier’s or
manufacturer’s warranty.
CMS is proposing to use the authority provided in
the Medicare statute to establish separate payment classes for: (1) new
technologies that eliminate the need for refilling and delivery of
oxygen contents; (2) delivery of portable oxygen contents; and (3)
delivery of stationary oxygen contents. The goals of this proposal are
to ensure that payments for oxygen and oxygen equipment are accurate,
that beneficiaries who use traditional portable oxygen systems have
sufficient access to oxygen contents, and that Medicare payments do not
create incentives to provide particular types of oxygen technology.
Since the law requires that these changes be budget-neutral, CMS is
proposing to redistribute the current payment amounts for oxygen and
oxygen equipment to offset any increase of Medicare payments that might
otherwise occur as a result of the proposed new classes.
The proposed rule includes additional supplier
requirements to safeguard beneficiaries. These include requiring a
supplier who furnishes rented oxygen equipment or a capped rental item
in the first month to continue furnishing the item throughout the entire
rental period, not allowing suppliers to switch out equipment except
under specified circumstances, and requiring a supplier to disclose its
intentions regarding assignment for the entire rental period.
The proposed rule on display and will be published
in the Federal Register later. Comments will be accepted until
September 25, 2006 and a final rule will be published later in the
fall. The rule can be located by
clicking here (pdf) and more background information is available by
clicking here (pdf).
Nursing Homes
“These new payment rates reflect our commitment to
improving the quality of care in the long-term care setting while
maintaining predictability and stability in payments for the nursing
home industry,” said Mark B. McClellan, M.D., Ph.D., administrator of
CMS. “They will enable nursing homes and the Medicare program to
continue to move forward in providing quality services for patients who
need post-acute care.”
The update notice also discusses several
initiatives aimed at furthering this objective, including plans to:
● Develop an integrated system of postacute
care payment, to make payments for similar services consistent
regardless of where the service is delivered;
● Encourage the increased use of health
information technology (HIT) to improve both quality and efficiency in
the delivery of post-acute care;
● Assist beneficiaries in their need to be
better informed health care consumers by making information about health
care pricing and quality accessible and understandable; and
● Accelerate the progress already being made in
improving quality of life for nursing home residents.
Under Medicare’s skilled nursing facility (SNF)
prospective payment system (PPS), each facility is paid a daily rate
based on the relative needs of individual Medicare patients, adjusted
for local labor costs. The daily rate covers the costs of furnishing
all covered nursing facility services, including routine services such
as room, board, nursing services, and some medical supplies together
with related costs such as therapies, drugs and lab services, and
capital costs including land, buildings and equipment.
CMS uses a skilled nursing facility “market basket”
to measure changes in the prices of an appropriate mix of goods and
services included in covered skilled nursing facility stays. The price
of items in the market basket is measured each year, and Medicare
payments are adjusted accordingly.
The new payment rates also include a special
adjustment made to cover the additional services required by nursing
home residents with HIV/AIDs.
“We are confident that the new payment rates will
be good for both the industry and the Medicare patients it serves,” Dr.
McClellan said.
The SNF PPS update notice is on the CMS website –
click here.
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