Main Series Page: Troubled Times in Nursing Homes
Stories by Thomas J. Cole
Of the Journal
The executive administrator of the Lakeview Christian Home of the Southwest in Carlsbad says the quality of care for her nursing-home residents hasn't suffered because of changes in Medicare reimbursements.
But Jody Knox said dealing with the Medicare changes hasn't been easy: "You have to spend a lot of effort managing every penny and every minute of care."
Knox said Medicare's old payment system for nursing homes, which allowed reimbursement for any reasonable cost, was bad for taxpayers and needed to be reformed.
"But the pendulum has swung from one extreme to the other," she said.
Medicare last year began phasing in fixed rates for nursing-home stays.
It also capped reimbursements for occupational, physical and speech therapy for nursing-home residents whose stays aren't covered by Medicare but who still receive medical services under the program.
The reimbursement changes followed several years of massive increases in Medicare billings by homes. And the result of the changes has been a lot less money for the nursing-home industry.
The government's goals were to make the nursing-home industry more efficient and to reduce abuse, but the industry says the cuts go too far and threaten quality of care.
The industry also says some nursing homes may start refusing to admit Medicare patients, although there is no widespread evidence to support either concern.
"At the moment, we don't have any systematic data that would support that the payments are inadequate to meet the needs of the residents," said Mike Hash, deputy administrator of the Health Care Financing Administration, which runs Medicare.
The agency is, however, working to assess the impact of the changes on quality of care.
Federal law requires nursing homes with Medicaid or Medicare patients to provide care that allows residents to reach their highest practicable "physical, mental and psychosocial well-being."
Whose responsibility?
Under Medicare's new fixed rates for nursing-home stays, a home is responsible for providing routine care as well as ancillary services -- such as prescription drugs, medical equipment and therapy.
The Lakeview Christian Home -- a nonprofit, church-affiliated corporation -- offers nursing-home care as well as independent-living, assisted-living and home-health services.
Before admitting someone for a Medicare stay, the nursing home examines the needs of that person and what reimbursement the home will receive, Knox said in an interview.
The home has delayed some admissions so tests could be run while the Medicare beneficiary is still in the hospital, she said. After admission, such tests would be the financial responsibility of the nursing home.
Also, Knox said, physicians have changed prescriptions for some Medicare beneficiaries after consultation with the home. The fixed rates for those beneficiaries were insufficient to cover the cost of drugs initially prescribed, she said.
Only eight of the 232 beds at Lakeview's two nursing homes are designated for residents whose stays are covered under Medicare. Knox said Lakeview is breaking even on those patients.
"That's about all we're doing," she said. But she warned the home could decide to reduce its financial risk by slashing in half the number of beds it sets aside for Medicare stays.
Knox said Medicare shouldn't make nursing homes responsible for providing laboratory work, X-rays and ambulance services under the fixed rates.
"We need to be responsible (only) for those things we can control," she said.
The therapy caps for some Medicare beneficiaries are less of an issue at Lakeview Christian Home, Knox said.
The annual caps are $1,500 for occupational therapy and $1,500 for physical and speech therapy combined.
A nursing home could bill a resident for any therapy costs above the caps but wouldn't be guaranteed payment. A home also might be able to bill Medicaid, according to the Health Care Financing Administration.
"The bottom line is that doctors are going to be much more careful in ordering services," Knox said.
"Those black-and-white areas (where therapy is clearly needed) are going to be taken care of," she said. "Those gray areas are not going to be taken care of."
The Lakeview Christian Home has had some care problems in recent years. A woman was accidentally strangled in a bed rail in 1993. Another woman disappeared in 1994 and was later found drowned in the Pecos River. The home paid $1.6 million in settlements but didn't admit liability.
'Compromises are made'
Other providers of nursing-home care for Medicare beneficiaries tell a similar story to that of Knox.
Sun Healthcare Group of Albuquerque, one of the nation's largest nursing-home chains and an operator of eight homes in New Mexico, said it continues to provide high-quality service.
Mark Wimer, president and chief operating officer of Sun, said the company has a legal duty to get residents to their highest level of independence but doesn't have a duty to provide services no one will pay for.
"They do conflict at some point ...," Wimer said in an interview. "Compromises are made."
For example, therapy programs are not as extensive as they once were, according to a Sun spokeswoman.
St. Joseph Healthcare System offers nursing care for Medicare beneficiaries at two Albuquerque facilities.
St. Joseph Healthcare said the centers are receiving at least 13 percent less money under the fixed rates than they did under the old reimbursement scheme.
As an example of how reimbursements sometimes fall short of the costs of care, St. Joseph Healthcare cited the case of a 78-year-old woman who received nursing care for a little more than two weeks.
The costs of the care were about $8,000; the reimbursements totaled about $5,000, according to St. Joseph Healthcare.
St. Joseph Healthcare hasn't changed the way it cares for Medicare beneficiaries, said Sheri Milone, therapy director for the system's Rehabilitation Hospital and Outpatient Center in Albuquerque.
But Milone said in an interview that physicians understand the nursing units are operating under tighter financial controls.
St. Joseph Healthcare is taking part in a government study on one of the two major parts of the Medicare fixed-rate system -- how the service needs of residents are determined.
St. Vincent Hospital in Santa Fe has a 20-bed unit within the hospital that provides nursing care for Medicare beneficiaries.
The hospital projects a first-year drop in reimbursements from $1.8 million to $1.1 million, according to Gary Thompson, the unit's administrator.
To offset the decline, the hospital has cut -- from about seven hours to six hours -- the amount of skilled-nursing time provided to residents each day, Thompson said in an interview.
Also, residents aren't getting as much occupational therapy as they once did, he said.
"We could probably make more significant cuts, but that would impinge on quality of care," Thompson said.
The nursing unit is covering its direct costs but isn't generating money to help in the hospital's payment of overhead expenses, such as building and utility costs, he said.
Northeastern Regional Hospital in Las Vegas, N.M., late last year shut down an eight-bed unit within the hospital that provided nursing care for Medicare beneficiaries.
Van Osborn, the hospital's chief financial officer, said in an interview that the unit was closed primarily because the changes in Medicare reimbursements resulted in substantially less money for the hospital.
"It wasn't a decision we just made lightly," Osborn said. He added that other nursing-home beds are available in the area for Medicare beneficiaries.
Alex Valdez, who heads the state departments of Health and Human Services, said he hasn't heard any reports of nursing-home care or admissions problems created by the Medicare changes.
Mark Thompson of the Senior Citizens Law Office, an advocacy group for the elderly in Bernalillo County, said that group also hasn't received reports of problems.
Michelle Lujan Grisham, director of the state Agency on Aging, said she hasn't evaluated the impact of the Medicare changes on nursing-home care but believes care will suffer.
"They (some nursing homes) were erring on the part of profit yesterday. They are today," Grisham said.
Only three New Mexico nursing homes went on Medicare's fixed rates in 1998. For the others, the rates kicked in between Jan. 1 and June 1 of this year.
The Health Care Financing Administration plans to adjust the fixed rates next year, but the nursing-home industry is pushing for an immediate increase.
Effects on care
The American Health Care Association, a trade group that represents nursing home and other long-term care providers, has hired an outside firm to determine impacts on nursing-home care as a result of the Medicare changes.
Preliminary data from the national study show a 15 percent decline in the average length of a Medicare-covered nursing-home stay.
"Nursing homes are re-evaluating the extent to which Medicare resources will allow them to appropriately care for the sickest patients," Susan Bailis, a representative of the American Health Care Association, told a Senate committee in June.
NovaCare of King of Prussia, Pa., a national provider of rehabilitation services, said data from the nursing homes it serves show a 55 percent drop in patients admitted to therapy in the first three months of the year, as compared to the same period in 1998.
NovaCare has estimated that 650,000 Medicare beneficiaries whose nursing-home stays aren't covered by the program but still receive some medical services under Medicare will receive therapy in a nursing home this year. And the therapy caps will be exceeded in the cases of 84,000, the company said.
Representatives of pharmaceutical suppliers for nursing homes have expressed concern that the fixed rates encourage homes to use low-cost drugs rather than those with greatest effectiveness.
"What happens to residents when needed but more-expensive medications are withheld to save money and replaced with less costly and less appropriate medications?" a supplier asked at a "town hall" meeting held in April by the Health Care Financing Administration.
There have been isolated reports of hospitals having difficulty moving Medicare beneficiaries to nursing homes.
The General Accounting Office said hospitals are a safety net for Medicare beneficiaries while the reimbursement changes for nursing homes are implemented and modified.
Elma Holder, founder of the National Citizens' Coalition for Nursing Home Reform in Washington, said the Medicare changes are being felt most by large nursing-home chains that relied heavily on the program, she said.
She said the industry has always argued that it doesn't receive enough money.
"The industry is quick to pick up on any excuse for not delivering good care," Holder said. "We have been suffering from quality-of-care problems for some time ... I don't know how it could get much worse."
health 
...go to bookmarks
E-mail Story
Print Friendly
