Legislative landscape '98: experts' overview - long-term care industry - Cover Story

Nursing Homes, Nov-Dec, 1998 by Cindy Grahl, Richard L. Peck

Long-term care managers were faced in 1998 with legislative/regulatory challenges of almost unprecedented depth and scope. All of them had the prospect of fundamentally changing the way facilities operate day to day. New skills in assessing and managing residents, hiring and training staff and maximizing facility revenues are required, or soon will be. As of late summer, long-term care providers were faced with:

* implementing the Medicare Prospective Payment System for their post-acute care operations;

* trying to make sense of an arbitrary $1,500 annual cap on Medicare-funded rehabilitation services;

* the looming (but uncertain) advent of consolidated Medicare Part B billing;

* electronic transmission of the MDS to state Medicaid officials;

* post-Boren-amendment worries about Medicaid reimbursement levels; and

* the Clinton administration's "get tougher" stance on nursing home quality of care.

How has all this played out so far? What does it portend for 1999? Recently, Nursing Homes/Long Term Care Management surveyed some key prognosticators in the field. Here's a sampling of their comments:

John Schaeffler Director of Congressional Affairs, American Health Care Association, Washington, DC:

"The current reimbursement categories of the PPS system are inadequate to account for the full range of ancillary costs incurred by residents. RUGs-III fails to factor in common costs of care, such as prescriptions, lab services and respiratory therapy. This creates a potential access problem for certain Medicare beneficiaries and forces them into high-cost settings. We propose that a policy be put into place to allow SNFs to pass through the costs of non-therapy ancillaries such as these until HCFA can improve the current distribution of resources among the 44 RUGs-III categories.

"We are also working on proposals to require HCFA to allow the fiscal intermediary to grant exceptions to the transition rate if a facility can demonstrate substantial change since 1995 in the level and intensity of services it provides. We also recommend broadening the definition of 'new provider' in the Balanced Budget Act's section on SNFs to include facilities disadvantaged by the transition rate that can show a significant change since 1995 in the nature of the residents they treat."

Larry Fronheiser President, National Association of Rehabilitation Agencies, Alexandria, VA:

"Almost everyone feels that the effect of the $1,500 cap on Medicare-funded rehabilitation therapies will primarily be on patients with more than one episode of care in a calendar year or with a significant disability or disease process. Most patients will not be affected. And there will be a fee schedule soon that will reduce the per- visit charge for services considerably.

"Anyone with any knowledge of what's going on sees that, under PPS, partnerships will be necessary between the nursing facility administration and rehab providers, no matter whether they are in-house or outsourced. The success of PPS depends on these rehab teams' ability to stay within the rules and perform efficiently. There is a lot at stake.

"In addition to the two big issues, PPS and the cap, there is also the addition of CPT coding as a requirement for outpatient billing. Nursing homes and rehab agencies did not use these in the past, as they were cost-based providers, but now they will have to learn to.

"It all centers on data collection, primarily. Your overall rehab costs determine your cost per visit and per hour. Second in significance is your relationship with outside influences. From where do you as a nursing home get your referrals? Which acute care hospital? What is their situation, and what is the communication mechanism between the two of you that will let you classify patients before admission, using the MDS?"

Kathleen M. Griffin, PhD National Director, Post-Acute and Senior Services, Health Dimensions Consulting Group, Benedictine Health Systems, Phoenix, AZ:

"Now that facilities are getting past the initial bouts with the 'trees' - getting ready for PPS and for automated MDS - they are beginning to concentrate on the 'forest' itself and do some strategic positioning for the future. These strategies tend to take three different directions:

"First, facilities that are less aggressive than others might see this business as just an add-on and decide not to take high-acuity Medicare patients at all. Or they might do the opposite and certify all their beds for Medicare - no longer having a distinct section because there are no longer different rates for Medicare residents.

"Second, facilities that are more aggressive and sophisticated - those with subacute care - can do one of two things: They can continue to have a subacute product line, but become more selective and turn down heavy-resource-use patients, such as those who are ventilator dependent or on TPN; or they can find a hospital (if they're not allied with one already) and develop a relationship with it. The friendly hospital can provide the nursing home certain in-kind services, such as continuing education, provision of a medical director or use of a nursing pool - important in times of a labor shortage - in exchange for help with high-resource residents. But you have to make this kind of arrangement for the entire facility, not just the Medicare patients, and ensure that the shared services do not constitute kickbacks. That would be fraud.