Main Series Page: Troubled Times in Nursing Homes
By Thomas J. Cole
Journal Investigative Reporter
The nursing-home industry has found allies in New Mexico Sens. Pete Domenici and Jeff Bingaman.
Both said they were contacted by representatives of Sun Healthcare Group of Albuquerque, one of the nation's largest nursing-home chains, which has reported losses in the hundreds of millions of dollars and job cuts in the thousands.
But Domenici and Bingaman said their efforts are aimed at helping the entire industry, which is reeling from Medicare cuts for nursing-home care. The cuts are the result of the Balanced Budget Act of 1997.
"What we're trying to do is to get a revisiting of this whole issue and sort of a rethinking of about was done in '97 to see how much of it makes sense and whether some of it does not," Bingaman said in an interview.
"I'm not trying to bail out Sun Healthcare," the Democrat said. "I'm not trying to bail out any particular company. I'm just saying that this is a vital service ... and I don't want to see that service interrupted."
Domenici and Bingaman sent a letter in May to Health and Human Services Secretary Donna Shalala, asking her to help the industry.
Sixty-one other senators signed on to the letter.
"We are concerned that (new Medicare) payment rates for (nursing-home care) are well below the levels envisioned by Congress, and this reduction in payments could seriously erode the quality of care available to our seniors," the letter said.
The letter asked Shalala to re-examine regulations adopted in implementing the new fixed rates for Medicare-covered stays in nursing homes.
"In particular, we would urge you to revise the regulations to reflect the needs of medically complex patients, particularly their need for nontherapy ancillary services," the letter said. Nontherapy ancillary services include medications and artificial limbs.
The government last year began paying nursing homes fixed rates for Medicare-covered stays. It also capped how much it will pay for occupational, physical and speech therapy for Medicare beneficiaries whose nursing-home stays aren't covered by the program but still receive some medical services under Medicare.
The government previously reimbursed nursing homes on a cost basis, which had resulted in ever-increasing billings in the billions of dollars.
The industry has claimed the new fixed rates are too low, particularly for nursing-home residents who require expensive drugs, respiratory therapy and other high-cost services.
Shalala's department is the parent agency for the Health Care Financing Administration, which runs Medicare.
"If HCFA does not revise the regulations, we fear we will see closings of facilities, layoffs of dedicated care-givers, reductions in access to (nursing-home) services and erosion in the quality of care," the senators said.
The Health Care Financing Administration is planning to make refinements to the fixed rates next year. The industry says that's not soon enough. It says it needs an immediate across-the-board increase in the rates.
But Mike Hash, deputy administrator for the Health Care Financing Administration, said the agency doesn't have the legal authority to do that.
Such a move, Hash said in an interview, must be authorized by Congress. And, he said, the agency hasn't seen evidence that Medicare beneficiaries are being denied access to nursing homes or that the quality of care is declining because of the new fixed rates.
He added, however, that Medicare's new caps on how much it will pay for physical, speech and occupational therapy are "ripe for review."
The caps apply to nursing-home residents whose stays aren't covered by Medicare but who are receiving therapy under the program.
Medicare will pay up to $1,500 a year for occupational therapy and up to $1,500 for physical and speech therapy combined.
The Health Care Financing Administration is studying the possibility of caps that would be based on patient diagnosis.
Also, there are proposals to leave the cap at $1,500 for occupational therapy but create separate caps of $1,500 each for physical and speech therapy.
In an interview, Domenici said the nursing-home industry can't wait until the fixed rates for nursing-home stays are refined next year by the Health Care Financing Administration.
"That's pretty long when an industry is bleeding like this one," the Republican said.
The fixed rates for nursing-home care were mandated in the Balanced Budget Act of 1997, which both Domenici and Bingaman supported.
One prominent senator who didn't sign the letter to Shalala was Iowa Republican Charles Grassley, chairman of the Senate Special Committee on Aging.
Grassley has questioned whether some nursing companies are suffering more than others because of debt problems or ill-considered expansions.
Domenici said he can't examine the operational details of every nursing-home company but believes the Medicare changes are a big part of the industry's woes.
Bingaman said his impression is that a variety of factors are hurting nursing-home companies.
Other health-care providers -- including hospitals, home-health agencies and health-maintenance organizations -- also are seeking changes in the Balanced Budget Act of 1997.
President Clinton recently proposed that $7.5 billion be spent over 10 years in payments to health-care providers whose ability to deliver quality services has been affected by the Balanced Budget Act. Nursing homes could get a share of that money.
Congress' General Accounting Office has reported on the pressure on lawmakers from health-care providers, including nursing homes.
"The very boldness of these changes has generated pressure to reverse course," the GAO said in June. "In the current environment, the Congress will face difficult decisions that could pit particular interests against a more global interest in preserving Medicare for the long term."
The GAO said it would be premature to significantly monitor the provisions of the Balanced Budget Act without thorough analysis or a trial of the provisions over a reasonable period of time.
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