Skilled Nursing Facilities:

Services Excluded From Medicare's Daily Rate Need to be Reevaluated

GAO-01-816: Published: Aug 22, 2001. Publicly Released: Aug 22, 2001.

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Congress and the Health Care Financing Administration recognized that certain services needed to be excluded from the skilled nursing facility (SNF) prospective payment system (PPS) rate to help ensure beneficiary access to appropriate care and to financially protect the SNFs that take care of high-cost patients. The criteria used to identify services--high cost, infrequently provided during a SNF stay and likely to be overprovided--and the services currently excluded appear reasonable. Even so, questions remain about whether beneficiaries have appropriate access to services that are covered in the rate or whether additional services should have been excluded. A second concern is that Medicare coverage for excluded facility services has been shifted from part A to part B, which will increase beneficiary liability. and program spending might increase because certain services are excluded only when provided in hospital settings, thus discouraging the use of less expensive, clinically appropriate sites of service. Finally, excluding services from the PPS rate when they are provided in emergency rooms may lead to overuse of emergency rooms, unnecessarily increasing Medicare spending. The Centers for Medicare and Medicare Services (CMS) does not plan to collect data on all services provided to beneficiaries during their SNF stays. Without these data, CMS will have difficulty updating the exclusions over time. The lack of information about services provided to beneficiaries during their SNF stays will also severely limit efforts to refine the payment system. An analysis of which settings (for example, SNF hospital outpatient department, ambulatory care, and emergency department) are used to deliver services to SNF patients is also important to help ensure that services are provided at the most efficient and appropriate site.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Congress has not addressed this recommendation.

    Matter: Because coverage under part B increases beneficiary liability and limits the services that are considered for exclusion from the SNF PPS, Congress may wish to clarify whether Medicare coverage of facility services excluded from the SNF PPS rates should be provided under part B or under part A.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: CMS noted that it does not have the authority to extend the exclusion criteria to other settings. It has discussed the need to get Congressional authority with hill staff, but Congress has not yet taken action.

    Recommendation: To help ensure that services are provided in the most appropriate setting, the Administrator of CMS should exclude services from the PPS if they meet the exclusion criteria, regardless of where they are provided.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  2. Status: Closed - Not Implemented

    Comments: CMS has requested funds in the FY 2004 budget to develop the capability to collect and analyze cost/utilization data on services provided during Skilled Nursing Facility Part A stays. However, CMS said that there are limitations in the available data, which preclude it from collecting the necessary data. It is also developing methods to identify the volume and type of services billed as consolidated billing exclusions.

    Recommendation: To refine and adjust the SNF PPS and to ensure adequate beneficiary access to appropriate medical services, the Administrator of CMS should develop a strategy to collect and analyze cost and utilization data on all services provided to Medicare beneficiaries during a SNF stay.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services


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