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Medicare Proposed Rule: Includes $1.05 Billion Forecast Error Adjustment

The Centers for Medicare & Medicaid Services (CMS) recently issued its Notice of Proposed Rule Making (NPRM) for FY 2010 (beginning October 1, 2009) payment updates for skilled nursing facilities (SNFs). The initial analysis of this rule indicates there are three critically important components for our profession - a full market basket update for FY 2010, and a cut in the form of an adjustment of Resource Utilization Group payment rates. The proposed rule also invites comment on changes resulting from the Staff Time and Resource Intensity Verification (STRIVE) Project, which would not be implemented until FY 2011.

The initial review of the proposed rule finds that it includes a full market basket update of 2.1 percent, or approximately $660 million in additional Medicare funds for FY 2010. We anticipate that the Obama Budget and Congress may seek to eliminate this update altogether to generate additional budget savings.

The proposal cuts Medicare SNF payments to account for a budget neutrality "forecasting error" made by CMS in 2005 - similar to last year's proposal. This rule seeks to correct for the error and includes a proposed recalibration of case mix weights and non-therapy ancillary services that results in a decrease in SNF payments for FY 2010 of approximately $1.05 billion. The net result of the two proposals is a decrease of SNF Medicare payments from FY 2009 to FY 2010 of approximately $390 million.

FHCA joins the American Health Care Association with concerns with CMS' efforts to reduce any Medicare funding for rehabilitation and nursing care in SNFs. AHCA believe that the agency fails to take into account the expanding role SNFs play in treating medically complex post-acute patients, the higher costs associated with caring for those patients and, importantly, the desired impact that re-implementation of the 75 percent rule has had on SNF patient mix and overall Medicare expenditures.

The rule also seeks comment on a proposal that would not be implemented until FY 2011, which is the development of a Resource Utilization Group (RUG) IV payment system. RUG-IV would include changes based on the STRIVE project and would recalibrate baseline indices creating a total of 66 RUG categories.

Using CMS's 4Q '08 RUGs data, it appears that an Urban SNF, with 'average' case mix and steady Part A census, would see a Part A revenue decline of just under 1% (between .81% to .87%), while a similar rural facility would decline .6%. Click here to review your Part A PPS Rates FFY 2010.

Economic Impact of Medicare Nursing Facility Payment Cutback in Florida

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Home About FHCA Advancing Excellence Contact Us Emergency Preparedness Family Forum FHCA Florida Leaders Assisted Living Job Board Members Only Member Search Membership Online Store Press Center Quality Improvement Seminars/Events Sites of Interest Treasure our Elders What's New FHCA on Twitter FHCA on Facebook	Members Only (Reimbursement) Medicare Proposed Rule: Includes $1.05 Billion Forecast Error Adjustment The Centers for Medicare & Medicaid Services (CMS) recently issued its Notice of Proposed Rule Making (NPRM) for FY 2010 (beginning October 1, 2009) payment updates for skilled nursing facilities (SNFs). The initial analysis of this rule indicates there are three critically important components for our profession - a full market basket update for FY 2010, and a cut in the form of an adjustment of Resource Utilization Group payment rates. The proposed rule also invites comment on changes resulting from the Staff Time and Resource Intensity Verification (STRIVE) Project, which would not be implemented until FY 2011. The initial review of the proposed rule finds that it includes a full market basket update of 2.1 percent, or approximately $660 million in additional Medicare funds for FY 2010. We anticipate that the Obama Budget and Congress may seek to eliminate this update altogether to generate additional budget savings. The proposal cuts Medicare SNF payments to account for a budget neutrality "forecasting error" made by CMS in 2005 - similar to last year's proposal. This rule seeks to correct for the error and includes a proposed recalibration of case mix weights and non-therapy ancillary services that results in a decrease in SNF payments for FY 2010 of approximately $1.05 billion. The net result of the two proposals is a decrease of SNF Medicare payments from FY 2009 to FY 2010 of approximately $390 million. FHCA joins the American Health Care Association with concerns with CMS' efforts to reduce any Medicare funding for rehabilitation and nursing care in SNFs. AHCA believe that the agency fails to take into account the expanding role SNFs play in treating medically complex post-acute patients, the higher costs associated with caring for those patients and, importantly, the desired impact that re-implementation of the 75 percent rule has had on SNF patient mix and overall Medicare expenditures. The rule also seeks comment on a proposal that would not be implemented until FY 2011, which is the development of a Resource Utilization Group (RUG) IV payment system. RUG-IV would include changes based on the STRIVE project and would recalibrate baseline indices creating a total of 66 RUG categories. Using CMS's 4Q '08 RUGs data, it appears that an Urban SNF, with 'average' case mix and steady Part A census, would see a Part A revenue decline of just under 1% (between .81% to .87%), while a similar rural facility would decline .6%. Click here to review your Part A PPS Rates FFY 2010. Economic Impact of Medicare Nursing Facility Payment Cutback in Florida The photos and images on the www.fhca.org website are the property of Florida Health Care Association and cannot be used in any manner without FHCA permission in writing.