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An Overview On July 30, 1999, the Department of Health and Human Services published the skilled nursing facility prospective payment system (SNF PPS) final rules that will be effective on September 28, 1999. There were no clear departures from the direction set in the interim final rules, and in the subsequent "clarifying" program memoranda from the Health Care Financing Administration (HCFA). In the final rules, HCFA continued to "clarify" its position, but did not make many changes to the actual regulations. In fact, the commentary preceding the final rule notes that it incorporates all of the provisions of the interim final rule with the exception of six (6) revisions. We have summarized those revisions, and we have also provided a brief overview of HCFA's position with regard to several other issues that have arisen since the genesis of the SNF PPS. Revision 1 & 2: Skilled Services In an effort to simplify the determination of what constituted a skilled service for Medicare purposes, the interim final rule had made several changes to the prior regulations. Among those changes was removing the descriptions of how overall management and evaluation of a care plan, observation and assessment of the patient's changing condition, and patient education services could constitute skilled services. Rather, the interim final rule stated that residents assigned to one of the upper 26 of the 44 RUG-III groups would automatically classify the resident as meeting the SNF level of care definition. Residents assigned to one of the lower 18 RUG-III groups would not automatically classify as either meeting or not meeting the level of care definition, but would instead receive an individual determination under the long-standing level of care criteria in the regulations. The final rule provides that a beneficiary will meet the level of care requirements for skilled care up to and including the assessment reference date for the 5-day assessment when the resident falls into one of the top 26 RUGs categories. However, aside from the 5-day assessment period, traditional skilling criteria will apply. That is, after the initial reference period, a resident will continue to be considered to meet the skilled level of care if his or her condition and care needs satisfy the traditional level of care requirements. HCFA has modified the regulations to make it clear that their basis for determining that a particular type of outpatient hospital service is subject to the consolidated billing provision is its inclusion within the customary scope of SNF care plans generally - regardless of whether it appears in the individual care plan of a particular resident. SNFs retain the overall billing responsibility for essentially the entire package of care furnished during the outpatient visit, other than the following excluded services: cardiac catheterization, computerized axial tomography (CT) scans, MRIs, ambulatory surgery involving the use of an operating room, emergency room services, radiation therapy, angiography, and lymphatic and venous procedures. The final rule reemphasizes that the only types of services that are categorically excluded from the PPS and consolidated billing provisions are the ones specified in Social Security Act section 1888(e)(2)(A)(ii). The exempt practitioner services include the following:
In addition to these exempt categories of practitioner services, the Act also excludes the following types of services:
The final rule points out that clinical social workers and audiologists are not excluded. HCFA has amended the final regulations to make it clear that transportation by an ambulance that meets the general medical necessity requirements is covered under the SNF Part A benefit as services that are generally furnished by (or under arrangements made by) nursing facilities. The amended regulations clarify that they apply to ambulance transportation specifically, and not simply transportation in general. Thus, a SNF need not pay for any other form of transportation, e.g., ambulette or van trips. Generally, SNFs receiving payment under the PPS for Part A services do not receive interim payments during the cost reporting year, and receive payment only after submission of a bill. The final rule now provides for periodic interim payments and accelerated payments in certain circumstances under PPS. Revision 6: Charging Residents HCFA has specifically precluded SNFs from charging a resident for an item or service that is subject to the consolidated billing requirement in the final rules. HCFA received several comments expressing concern over the ability of the SNF PPS to provide adequate payment for certain outlier or extraordinary cases, such as HIV-infected patients with significant drug therapy needs, patients receiving intravenous (IV) drug therapy for antibiotic-resistant infections, ventilator-dependent patients, or simply patients with very high costs. HCFA responded by stating that its hands were tied by the implementing statute, which did not provide for additional payments over and above what are already in place. HCFA stated the following with regard to this issue: "We understand the concerns expressed in the comments related to this issue. As discussed in the past analysis accompanying the interim final rule, the SNF PPS will have a varying impact on providers. Because 'prices' are based on averages, SNFs should expect that certain patients cost more than payments and others less. The extent to which certain facilities can provide quality care, while incorporating efficiencies into their purchasing of services and operations, will affect how well they manage under this payment system, which uses mean-based prices rather than reasonable costs. Financial performance should, therefore, be determined by looking across each facility's Medicare population, not on a patient specific comparison of costs and the payment rate under which the rate would become essentially a limit." (Emphasis added). In addition to the statutory limitations, HCFA pointed out that "the issue of whether specific services should be identified and paid separately appears to conflict with certain fundamental concepts embodied in a PPS." That is, a system based on the bundling of services for similar patients and paying on an average. HCFA also points out that if SNFs were to be provided economic relief, the "budgetary impact would be significant and would reduce the savings to Medicare associated with the SNF PPS provisions of the [Balanced Budget Act]." The nursing home industry should take comfort in the fact that HCFA is putting those savings to good use. It announced in the final rule that it is "funding substantial research" into further refining and tinkering with the case-mix system! With regard to the $1500 annual per resident limit on Part B payments for outpatient therapy services, HCFA noted the following:
Facilities are responsible for paying for ambulance services under the PPS and consolidated billing provisions as long as an individual remains a SNF "resident." An ambulance trip is considered to be furnished to a SNF resident if it occurred during the course of a SNF stay. The initial ambulance trip that first brings a beneficiary to a SNF is not subject to consolidated billing, nor is the trip that conveys the resident to another setting if such a trip ends the beneficiary's "resident" status. Those events are:
HCFA received many comments asking it to exclude the ambulance trips to an ESRD center, but HCFA pointed out that the performance of dialysis - even if it occurs in the outpatient hospital setting - is a type of activity that falls within the scope of SNF care, and thus, the SNF must pay for the ambulance trip. Dialysis services are specifically excluded from the scope of the consolidated billing provision, but are included within the scope of the Part A extended care benefit. Thus, in HCFA's words: "[T]he exclusion of dialysis from the consolidated billing provision means that an SNF is not itself required to furnish or make arrangements for this service. However, even though the SNF is not required to furnish or make arrangements for dialysis during the course of a covered Part A stay, if it nonetheless elects to do so, the dialysis is included within the scope of the Part A extended care benefit, as well as in the PPS per diem payment. Alternatively, since the exclusion of dialysis services from the consolidated billing provision allows the SNF the option of declining to furnish or make arrangements for dialysis services, those services that meet…the coverage requirements for the Part B dialysis benefit could be furnished and billed to Medicare directly by an outside supplier." For consolidated billing purposes, HCFA has adopted the definition of emergency contained in 42 C.F.R. § 424.101: "services that are necessary to prevent death or serious impairment or health, and because of the danger to life or health, require use of the most accessible hospital available and equipped to furnish those services." Emergency services are excluded even if they are addressed on an individual resident's care plan as a contingency plan in case of a medical emergency. In the interim final rule, HCFA stated that it was considering requiring facilities to accept Part B payment equal to the lower of the amount of the applicable fee schedule or the actual amount paid to the supplier, or to require the SNF to pay the full fee schedule amount to the supplier. As we have pointed out in our PPS seminars, and in many discussions with our clients, HCFA does not have the authority to require either of those options. HCFA recognized this fact in the final rule, and stated: We agree that, under current law, an SNF's relationship with its supplier is essentially a private contractual matter, and the terms of the supplier's payment by the SNF must be arrived at through direct negotiations between the two parties themselves. Accordingly, we believe that the most effective way for a supplier to address any concerns that it may have about the adequacy or timeliness of the SNF's payment would be for the supplier to ensure that any terms to which it agrees in such negotiations satisfactorily address these concerns. Thus, with the exception of certain situations that could raise fraud and abuse issues, SNFs may pay their ancillary suppliers whatever amount can be negotiated, and the SNF will be paid the full amount of the fee schedule. That is, contrary to many people's belief, SNFs do not need to tie their payments to ancillary suppliers to the applicable fee schedule.
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