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Will Medicare Cuts Affect Nursing Homes Negatively?

According to an article by Arielle Levin Becker of the CT Mirror Federal officials are planning a $4 billion cut in Medicare funding to nursing homes in an effort to cut down on unanticipated overspending; a move that could lead to staff cuts and some homes closing their doors, according to critics.

It seems that a change in the way nursing homes were billing for physical, occupational and speech therapy is at fault for the cut backs.

You see the way it used to work is every single person who goes in for one hour of therapy Medicare is billed for the sixty minutes of time, which is fine but nursing homes often do group therapy and concurrent therapy. In group therapy a single therapist works with several people at once and in concurrent therapy a single therapist works with two patients at the same time doing different therapies. So if five people are in the room for the same therapy then Medicare is billed for five hours worth of therapy time. So they changed things.

The change was for those who receive concurrent therapy. Instead of billing Medicare for two hours worth of time for two patients, nursing homes had to divide the time between the patients so two patients, one hour worth of concurrent therapy would be a 60 minute bill. But Medicare was not trying to cause harm so they raised the rates that were to be paid for the therapy by between 39 and 49%. The change did not have the desired effect and instead of lowering the bills spending rose by $2.1 billion in just 6 months. Now what?

The solution seems to be to take away that 39 to 49% extra and go back to the same billing amount if not the same billing style, which should reduce the budget by around $4.8 Billion dollars.

"Because the recalibration is removing an unintended excess payment rather than decreasing an otherwise appropriate payment amount, we do not believe that the recalibration should negatively affect facilities, beneficiaries, or quality of care, or create an undue hardship on providers," the agency said in the final rule containing the change.

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