The Centers for Medicare & Medicaid Services (CMS) today announced a proposed 2.9 percent increase in Medicare payment rates to skilled nursing facilities for fiscal year 2004. The increase will result in nearly $400 million more in Medicare payments to nursing facilities that furnish certain skilled nursing and rehabilitation care to Medicare beneficiaries recovering from serious health problems.
The proposed rule, to be published in May 16 Federal Register, also reflects the decision by CMS to retain for now the current classification system that establishes daily payment rates to skilled nursing facilities based on the needs of Medicare beneficiaries. This decision will result in nursing homes continuing to receive an estimated $1 billion in temporary add-on payments next year. The individual classification groups are known as the Resource Utilization Groups or RUGs.
Congress has encouraged CMS to make case-mix refinements, as the classification changes are known, in an effort to more accurately reimburse nursing homes. The case-mix refinements are intended to ensure that Medicare pays appropriately for patients that require more complicated care. After careful review of the available data, CMS determined that the research is not sufficiently advanced at the present time to implement the refinements this year. CMS continues to work with the Urban Institute, a non-partisan economic and social policy research group, to develop appropriate case mix refinements.
CMS uses a skilled nursing facility "market basket" to measure inflation 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.
Medicare’s prospective payment system (PPS) for skilled nursing facilities was adopted in 1998. Under the SNF 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; related costs such as therapies, drugs and lab services; and capital costs including land, buildings and equipment.
"We are committed to providing high quality care to those in nursing facilities," said Tom Scully, administrator of CMS. "We are currently working with Congress to ensure that Medicare skilled nursing facility payments provide adequate funding for the proper care of patients."