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Skilled Nursing Facilities: Approval Process for Certain Services May Result in Higher Medicare Costs

HEHS-97-18 Published: Dec 20, 1996. Publicly Released: Jan 22, 1997.
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Pursuant to a congressional request, GAO reviewed: (1) the growth of skilled nursing facility (SNF) costs and SNF use in relation to hospital use; (2) the characteristics of Medicare SNF patients and the types of services they receive in SNFs being paid higher than normal amounts compared to other SNFs, as well as whether patients in such facilities receive appropriate care; and (3) whether the Health Care Financing Administration's (HCFA) process for assessing requests for higher payments ensures that only SNFs furnishing atypical services are granted exceptions.


Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Health and Human Services The Secretary of Health and Human Services should direct the Administrator, HCFA, to revise the SNF exception to the RCL review process so that it can differentiate between SNFs that furnish atypical routine services to Medicare patients and SNFs that merely have higher than normal costs. Looking at factors that reflect Medicare patients rather than all SNF patients occupying Medicare-certified beds might be one way to do so. Using patient-specific data, some of which are currently submitted but not used, might be another way.
Closed – Not Implemented
HHS stated that the requirement in the Balanced Budget Act of 1997 to pay SNFs on the basis of a case-mix adjusted prospective payment system will eliminate the need for an exception process for the routine cost limits. Therefore, additional work on the cost limit process is probably not warranted.

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