Press Releases

MEDICARE NURSING HOME PAYMENTS TO INCREASE IN 2007, CMS ANNOUNCES

            Medicare payments to nursing homes will increase by approximately $560 million in 2007, the Centers for Medicare & Medicaid Services (CMS) announced today. The annual update notice of the new payment rates is on display today at the offices of the Federal Register.

            The 3.1 percent increase will be reflected in Medicare payment rates to nursing facilities that furnish certain skilled nursing and rehabilitation care to Medicare beneficiaries recovering from serious health problems. 

            “These new payment rates reflect our commitment to improving the quality of care in the long-term care setting while maintaining predictability and stability in payments for the nursing home industry,” said Mark B. McClellan, M.D., Ph.D., administrator of CMS. “They will enable nursing homes and the Medicare program to continue to move forward in providing quality services for patients who need post-acute care.”

            The update notice also discusses several initiatives aimed at furthering this objective, including plans to:

• Develop an integrated system of post‑acute care payment, to make payments for similar services consistent regardless of where the service is delivered;
• Encourage the increased use of health information technology (HIT) to improve both quality and efficiency in the delivery of post-acute care;
• Assist beneficiaries in their need to be better informed health care consumers by making information about health care pricing and quality accessible and understandable; and
• Accelerate the progress already being made in improving quality of life for nursing home residents.

            Under Medicare’s skilled nursing facility (SNF) prospective payment system (PPS), each facility is paid a daily rate based on the relative needs of individual Medicare patients, adjusted for local labor costs.  The daily rate covers the costs of furnishing all covered nursing facility services, including routine services such as room, board, nursing services, and some medical supplies together with related costs such as therapies, drugs and lab services, and capital costs including land, buildings and equipment.         

CMS uses a skilled nursing facility “market basket” to measure changes in the prices of an appropriate mix of goods and services included in covered skilled nursing facility stays.  The price of items in the market basket is measured each year, and Medicare payments are adjusted accordingly.      

            The new payment rates also include a special adjustment made to cover the additional services required by nursing home residents with HIV/AIDs.

            “We are confident that the new payment rates will be good for both the industry and the Medicare patients it serves,” Dr. McClellan said.

            The SNF PPS update notice is on the CMS website at http://www.cms.hhs.gov/snfpps/downloads/cms-1530-n.pdf.

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