Medicare Proposes Reimbursements To Skilled Nursing Facilities Remain The Same in Fiscal Year 2006

CMS on Friday proposed new Medicare payment rates for skilled nursing facilities that would keep fiscal year 2006 payments at about the same level as FY 2005, easing concerns from nursing home administrators that the Bush administration would cut payments by 10%, the AP/Las Vegas Sun reports.

Under the proposed payment rules, CMS would eliminate $1.5 billion in annual payments that were added to skilled nursing homes' daily rates for Medicare beneficiaries. The add-on payments account for about 10% of skilled nursing facilities Medicare income (Freking, AP/Las Vegas Sun, 5/13). To recompense for the funding loss, CMS proposed revising the payment system by adding nine additional payment categories to compensate skilled nursing facilities more accurately for medically complex cases.

The proposal also includes an increase in the reimbursement formula, called the "case mix index," that is equal to about half of the amount skilled nursing facilities would lose by removing the add-on payments. CMS also proposed increasing payments 3% annually to match inflation (CQ HealthBeat [1], 5/13).

According to CMS, the new rates would generate a 10% profit margin for nursing home care covered under Medicare. Ultimately, nursing homes would receive about $15 billion in Medicare payments in FY 2006, about the same amount as received in FY 2005.

CMS Administrator Mark McClellan said, "Refining the nursing home payment system will bring greater accuracy to our payments, greater support for patients who need the most help and much-needed predictability for the nursing home industry."

Alliance for Quality Nursing Home Care Chair Stephen Guillard said, "I've moved from a state of panic and gross concern to one of cautiously optimistic that when the final review is done, this is something the nursing home industry can manage their way through" (AP/Las Vegas Sun, 5/13).

The American Medical Association on Friday endorsed a bill (HR 2356) that would replace the sustainable growth rate payment-update system with a formula "that more closely resembles physicians' cost of delivering care," CQ HealthBeat reports.

Under the bill, physicians would receive at least a 2.7% payment increase in 2006. Without congressional action, payments to physicians are scheduled to decline by 5% in 2006.

According to CQ HealthBeat, "While Congress may take action to avert scheduled Medicare payment cuts to physicians next year, lawmakers and lobbyists have said it is unlikely that Congress will tackle a broader overhaul this year" because of the high cost of doing so (CQ HealthBeat [2], 5/13).