When Congress enacted the Medicare skilled nursing home benefit in 1965, it was considered primarily a cost effective alternative to extended hospital stays. Thus, the benefit provides elderly and disabled beneficiaries with a maximum of 100 days of intensive nursing or rehabilitative care following a hospital stay. However, the 100-day limit is part of the Medicare myth; in actuality, the average span of Medicare coverage in a long term care facility is only 28 days. Obstacles to utilization beyond the 28 day average are built into the Medicare program. Perhaps the most significant problem faced by a Medicare beneficiary seeking SNF care is the narrow definition of covered services.. Beneficiaries must require "on a daily basis skilled nursing care provided directly by or requiring the supervision of skilled nursing personnel or other skilled rehabilitation services, which as a practical matter can only be provided in a SNF on an inpatient basis..." Under this definition, persons recovering from a stroke who do not have rehabilitative potential, or terminal cancer patients who do not need daily pain injections would not be eligible for the SNF benefit, regardless of patients' ability to care for themselves. The coverage requirements are further complicated by a "three-day prior hospitalization" requirement. According to this rule, a patient must spend at least three days in a hospital in order to be considered for Medicare coverage in a SNF. While 22-020 0-83--12 this policy may, in some cases, cause unnecessary hospital admissions, it also eliminates from consideration certain patients who might otherwise be considered Medicare-eligible. Patients admitted directly from home or from another long term care facility fall into this category. Finally, and perhaps most devastating to beneficiaries is the copayment requirement. According to current practices, a Medicare patient spending 60 days in a hospital in 1983 will pay a deductible of $304, but if in a SNF for the same number of days would be faced with 5 times that amount in copayments: $1,520. The chart below shows the cumulative impact of patient cost sharing for SNF vs. hospital care. As a result, patients needing nursing home care for an extended period of time cannot utilize the full 100-day Medicare benefit without severely depleting or completely liquidating financial resources. Consequently, many individuals are faced with the choice of refusing care or joining the thousands of impoverished Americans on the Medicaid rolls for the Medicaid program does cover extended stays in SNFs as well as intermediate care facilities (ICFS) Due principally to these barriers to coverage, utilization of the Medicare SNF benefit has been extremely low. With demand for care increasing or at least remaining the same, Medicare-covered days per enrollee declined over 17 percent between 1977 and 1979. In fact, days per aged person declined in 38 states, with more than a 10 percent drop in 27 states. Nursing or older Today's unmet needs for long term coverage is not going to go away; the demographics are clear that they will only worsen. Nursing home utilization rates increase as people age. home patients typically are though as of being 65 years but more precisely are 75 or more. In fact, more than 70 percent of nursing home residents are 75 and over. Future demand for nursing home care is certain because of increasingly rapid growth rates for successively older segments of the elderly population. One on the most important achievements this Committee can have is to chart a course for Medicare to address its beneficiaries need for long term care coverage. Mindful of budget pressures, we would like to present some specific opportunities or considerations for improving Medicare's long term care policies and practices. Prospective Payment System for SNFs AHCA recommends that the Medicare program can achieve significant savings and enable beneficiaries to receive the appropriae services in the least costly setting by implementing a prospective reimbursement system for skilled nursing facilities. spective payment system must include incentives for efficiency and cost containment. The pro We are pleased the Health Care Financing Administration has reported its intention to submit to Congress by July 1 a SNF prospective proposal. It is hoped the HCFA proposal for SNFs, like their proposal for hospitals, will earn provider support and easy Congressional consideration. There is a serious problem with the lack of participation by long term care facilities in the Medicare program. As a result, many Medicare beneficiaries in need of SNF care are not able to receive the appropriate care and are "backed-up" in expensive hospitals longer than necessary awaiting SNF placement. ! Medicare's inappropriate payment system is the major reason for the lack of participation by SNFs in Medicare. At any given time there are 19,000 Medicare beneficiaries "backed-up" waiting for a SNF bed and Medicare dollars are being wasted. A national survey undertaken by the American Association of Professional Standards Review Organizations in 1980 indicated that Medicare was paying for more than 6 million days of hospital care per year for patients for whom a bed in a SNF could not be found. A recent study by the Urban Institute confirms these estimates. It should be noted that the hospital proposal, which appears set for early enactment, will provide a strong incentive for discharge of Medicare patients as early as possible. It will be important that a new payment system for SNFS attract more provider participation and be implemented no later than the hospital plan. The coordination of these two initiatives is necessary to avoid a hospital "back-up" crisis and to facilitate the continuity of post-hospital care. The current retrospective reimbursement system is unsatisfactory because it is inflationary, contains no incentives for efficiency, and no financial incentives for SNFs to participate. A reimbursement method that allows providers simply to pass costs through the system without providing them with any real incentive to cut |