Medicare News
| For Immediate Release: | Contact: |
| Friday, July 30, 1999 | CMS Office of Public Affairs 202-690-6145 |
For questions about Medicare please call 1-800-MEDICARE or visit www.medicare.gov. |
|
HCFA ANNOUNCES NEW MEDICARE PAYMENT RATE FOR NURSING HOMES
The Health Care Financing Administration announced today that Medicare payment rates to skilled nursing facilities will increase by 2.1 percent for fiscal year 2000.
The new rates, contained in a notice published today in the Federal Register, will be effective Oct. 1, 1999. Nursing home rates for post-acute care under Medicare are based on a prospective payment system, required by the Balanced Budget Act of 1997, which was implemented last year as a way to provide high quality, efficient care.
"This increase will help nursing homes as they continue the transition to the prospective payment system so that beneficiaries receive the quality care they deserve," HCFA Deputy Administrator Michael Hash said.
Under the prospective payment system, payment rates to skilled nursing facilities cover the costs of furnishing most covered nursing home services. These include allowable post hospital nursing home services provided under Medicare Part A and services covered under Part B before the prospective payment system began on July 1, 1998. Medicare Part A covers inpatient care, and Part B pays doctor bills, therapy and other services. The prospective payment system now covers skilled nursing facility services, excluding payment for physician and certain other practitioner services.
The rate updates are based on increases in the cost of covered SNF care and changes in the geographic variation in wage levels. The Medicare SNF payment rate is determined by a formula set in law. HCFA has no statutory authority to make rate increases beyond the inflation adjustment.
Under the prospective payment system each facility receives a base payment amount adjusted for local wages and the clinical characteristics of individual patients. Covered costs include routine services such as room, board, nursing services, minor medical supplies; ancillary costs such as therapies, drugs and lab services; and capital costs including land, building and equipment.
This payment system was designed to ensure better patient care by relating payments to the condition of the patient, recognizing that some need more services or more expensive care than others, rather than a set amount per patient. Under the previous system of basing payment on nursing home costs, the skilled nursing facility benefit was one of the fastest growing components of Medicare spending. Hospitals have been paid under a prospective payment system since 1983.
For the first three years of PPS implementation, the payment rate for a nursing home is determined by a blend of a facility specific rate and a federal rate. In the first year, the facility percentage was 75 percent and the federal rate 25 percent. As facilities enter their second year under PPS, the mix becomes 50-50. This began as early as July 1, 1999 for some nursing homes, depending on the individual facility's cost reporting period. In the third year, the blend will be 25 percent facility and 75 percent federal, and in the fourth year all nursing facilities will be paid at the federal rate.
