On Capitol Hill This Week, Alliance for Quality Nursing Home Care Stressing Full Correction of SNF Medicare Payment System by FY2013

Alliance Approach to Prospective Medicare Payment Recalibration Under New RUGs-IV System Seeks to Protect Quality Patient Care

WASHINGTON, July 12, 2011 /PRNewswire-USNewswire/ -- In reaching out to Capitol Hill offices this week to continue the education process surrounding its plan to achieve a full correction of the Medicare payment system for Skilled Nursing Facilities (SNFs) by FY2013, the Alliance for Quality Nursing Home Care is stressing the need to prospectively recalibrate payment corrections under the new RUGs-IV system in a manner that does not disrupt facilities' continued ability to offer quality care to the nation's Medicare beneficiaries.

"Because the complexity of the Medicare payment issues surrounding RUGs-IV are enormous and the details surrounding the process of a prospective payment recalibration are critical, our objective this week is to ensure Congress understands that our plan calls for a full payment correction by FY2013," stated Alan G. Rosenbloom, President of the Alliance. "The Alliance acknowledges payment problems resulting from the transition to the new RUGs-IV system and is committed to working with Congress and the Centers for Medicare and Medicaid Services (CMS) to correct this. "

Historically, the Alliance leader said, the Centers for Medicare and Medicaid Services (CMS) has implemented payment policy changes in a "budget neutral" manner. Unfortunately, Rosenbloom pointed out, CMS has estimated that spending under the new RUGs-IV system appears to be higher than expected based on the first three months of experience with this new payment methodology. "As CMS works to refine the SNF payment system, it is critical that any prospective corrective action be based on actual data and more than three months of experience with the new RUGs-IV payment system," Rosenbloom continued.

"SNFs cannot withstand an over-correction because of the fragile economics of the sector driven primarily from substantial under-reimbursement by the Medicaid program," he continued. In 2010, the Alliance leader said the estimated shortfall in Medicaid payments is projected to be $17.33 per resident per day, and third party estimates of the excess spending resulting from the new RUG-IV system differ from CMS's estimate of more than 12 percent. "Given the uncertainty regarding the actual level of overpayments, prospective corrections must be made in a gradual manner based on additional experience," Rosenbloom continued. "CMS' proposed option to implement a net reduction of 11.3 percent for SNF payment rates in FY2012 would adversely affect an already fragile sector and would be inconsistent with the manner in which corrections have been implemented in other sectors."

Rosenbloom said that given all the other system changes under way, the Alliance would strongly prefer that changes CMS is also proposing to group therapy and reporting policies be deferred until underlying problems with the RUGs system are resolved. However, if these policies are implemented in FY12, he noted, corrections to the SNF payment system must also take into account the financial impact of these new requirements. "Otherwise, the implementation of these therapy changes could result in SNF payments being reduced beyond the level needed to return to budget neutrality," he warned.

The Alliance's Proposal to Achieve Full Correction by FY2013
To ensure Medicare prospectively pays appropriately under the new RUGs-IV system, the Alliance proposes that CMS immediately implement a 3% payment reduction beginning in FY12. After this reduction is taken, the Alliance proposes that CMS continue to evaluate and adjust payment rates every six months based on additional data and experience with the new system.

Under this plan, payment rates would be adjusted every six months in FY12 and FY13, until the RUGs-IV payment system is corrected.  As part of this effort, if proposed changes to group therapy and reporting changes are not deferred, any payment reductions resulting from these new requirements would be taken into account in determining whether budget neutrality was reached.

At the end of FY13, CMS would make any further adjustments needed to complete the process of returning the SNF payment system to budget neutral. This means any excess payments that occur in FY12 or FY13 as the RUG-IV system recalibration is being implemented will be returned to the Medicare program by the end of FY13. "This measured, responsible, reasonable approach would result in the RUGs-IV payment system being fully corrected by the end of FY13," Rosenbloom concluded. "This will also ensure that prospective payment corrections do not disrupt nursing homes' ability to continue offering quality care to Medicare patients across the nation.

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SOURCE Alliance for Quality Nursing Home Care