Medicare News
| For Immediate Release: | Contact: |
| Thursday, July 26, 2001 | CMS Office of Public Affairs 202-690-6145 |
For questions about Medicare please call 1-800-MEDICARE or visit www.medicare.gov. |
|
MEDICARE TO INCREASE NURSING HOME PAYMENTS BY 10.3 PERCENT
The Centers for Medicare and Medicaid Services (CMS) announced today that Medicare will increase aggregate payments to skilled nursing facilities by 10.3 percent, starting Oct. 1, 2001.
The increase reflects higher rates under Medicare's nursing home prospective payment system, which covers certain skilled nursing care for Medicare beneficiaries recovering from serious health problems. Overall, Medicare will pay an estimated $14.2 billion to skilled nursing facilities in fiscal year 2002. The payment rate increase alone will increase overall payments about $1.5 billion above the current fiscal year's total. Total Medicare spending on skilled nursing facilities in FY 2001 is estimated at $12.2 billion.
"These increases in payments to the nation's skilled nursing facilities will allow them to continue to provide quality care for critically ill elderly and disabled Medicare beneficiaries, while making sure taxpayer dollars are well spent," HHS Secretary Tommy G. Thompson said.
The payment updates are based on increases in the cost of care and the provisions of three laws - the Balanced Budget Act of 1997, the Balanced Budget Refinement Act of 1999 and the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000. The updates will be published as a final rule in the July 31 Federal Register.
The final rule also includes provisions to ease the transition to the prospective payment system for small rural hospitals that operate Medicare "swing beds," which can furnish either acute care or skilled nursing care to beneficiaries, as needed. Currently, "swing-bed" services are paid on a reasonable cost basis, subject to certain limits.
Under the final rule, the transition to prospective payment for "swing beds" will begin July 1, 2002. In addition, CMS has developed a revised, streamlined resident assessment tool for hospitals to use when providing skilled nursing care in "swing beds." The assessment form was shortened from six pages to two pages and requires almost exclusively information needed to ensure accurate payments under the prospective payment system.
As required by the Balanced Budget Act of 1997, Medicare implemented the nursing home prospective payment system in 1998. Under the system, each facility is paid a daily rate based on the relative needs of individual patients, adjusted for local wage costs. Under the new rates, Medicare will pay as much as $550 per day for beneficiaries with the most intensive skilled care needs.
The daily payment rates cover the costs of furnishing most covered nursing home services, including routine services such as room, board, nursing services, and minor medical supplies; related costs such as therapies, drugs and lab services; and capital costs including land, building and equipment.
To ease the impact on skilled nursing facilities, the prospective payment system has been phased in over the last three years. For the first three years of implementation, the rate for a nursing home was determined by a blend of a facility-specific rate and a federal rate. All facilities will be paid under the full federal rate in fiscal year 2002.
In May, CMS, the former Health Care Financing Administration, published a proposed rule that estimated a smaller increase in aggregate payments for skilled nursing facilities. CMS recalculated those figures for the final rule, leading to the new, larger estimates. The new rates include a 16.7 percent increase in the nursing component of the base payments.
