The SNF PPS final rule - finally - Health Care Financing Administration's regulations affecting skilled nursing facility-based prospective payment system and consolidated billing - Editorial

Nursing Homes, Oct, 1999 by Jade Gong

Since July 1998, administrators and DONs have been struggling to understand the intricacies of Medicare's Prospective Payment System (PPS) rules. Indeed, they have cared for patients without formal assurance that what they were doing was actually in compliance with any Medicare "final rules." In addition to the interim final regulation published on May 12, 1998, Medicare's policies have been conveyed through Question and Answer guidance, Program Memoranda and various informal avenues, none of which were as definitive as a final rule. Finally, this July 30, the Health Care Financing Administration (HCFA) published in the Federal Register two important regulations impacting skilled nursing facility (SNF)-based PPS and consolidated billing:

* HCFA-1913-F is the final rule governing the implementation of SNF PPS and consolidated billing. This rule, which became effective on September 28, 1999, offers numerous clarifications that will be tremendously helpful in operationalizing SNF PPS.

* HCFA-1056-N is the update notice that HCFA is required to publish annually. In this payment notice, HCFA announces that an inflation factor of 2.1% will be applied - beginning October 1, 1999, and through September 30, 2000.

We are all well aware that the first year of SNF PPS has been difficult financially for virtually all SNFs, and disastrous for several publicly traded nursing home companies and contract therapy vendors. Within this challenging operating environment, national trade associations representing long-term care providers and ancillary vendors, in concert with professional associations representing therapists, pharmacists, physicians and others, are relentlessly lobbying HCFA and the Congress for regulatory relief from the Balanced Budget Act of 1997. All of these voices are seeking a restoration of "excess" savings to the Medicare SNF program in order to maintain high-quality SNF care. Within this context, the final rule contained both good news and bad news.

The bad news is that HCFA declined to take any policy actions to address widespread concerns with the inadequacy of nontherapy ancillary payment and payment levels overall HCFA did not create outliers, did not carve out any nontherapy ancillary costs and did not offer any refinements in the case-mix methodology. According to HCFA, they received more than 500 comments from individuals and organizations interested in SNF PPS. HCFA acknowledged these concerns and reported that major analytical studies now under way might lead to future case-mix refinements. But given the urgent need for financial relief, these organizations were understandably disappointed.

The good news is that HCFA offered numerous clarifications that are important to front-line providers who have the daily responsibility for assessing Medicare patients and documenting their skilled care needs. For example, clarifications are offered in the definition of daily skilled care, the presumption of coverage and numerous other issues, as described below.

First, though, note the old saying, "The devil is in the details." Survival and, ultimately, success in the brave new world of SNF PPS demand relentless attention to many details (some would say too many details). Nurses must now select the "optimal" assessment reference date, count minutes of "delivered" therapy, count minutes of "expected" therapy, carefully "look back" to certain services delivered in the hospital setting and continue to assess and document the daily skilled care needs of patients. Because many of the fundamental details of SNF PPS were unclear as the system was implemented or as interpretations were changed over the past year, the final rule now provides clear guidance on several policy issues. These must be operationalized immediately by facility staff.

Although several of the important policy clarifications are highlighted below, careful review of the final rule is needed to identify and then implement each policy clarification.

* Initial period of coverage

Although initially many SNFs believed that a prospective payment system would provide guaranteed coverage for the full interval between assessments and that daily assessments of skilled needs were unnecessary, HCFA's clarification in Transmittal 405 asserted that daily assessments of skilled care were still necessary. In the final rule, HCFA explains that a patient who qualifies for a RUG group is considered to meet the SNF level of care requirements up to and including the assessment reference date of the first assessment. This means that if a patient qualifies for one of the upper 26 RUG groups, then the SNF will have presumed Medicare skilled care coverage for up to 8 days. While providers had hoped for a longer period of presumed coverage, this final rule does provide the clarity that admission nurses need to be able to classify and admit patients, knowing that they might have at least 8 days of Medicare SNF care.

* Examples of skilled nursing and rehabilitation services

In the interim final rule, HCFA eliminated several "examples" of skilled care when implementing the RUG model of care. However, long-term care providers sought to have these examples restored in order to justify daily skilled care, particularly at the end of stay. HCFA concurred, and the final rule restores and refines these examples of skilled care below: