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How much does the Balanced Budget Act of 1997 affect nursing homes?

Mississippi’s skilled nursing facilities under fire from BBA

Editor’s note: This story is the third in a series about the Balanced Budget Act’s impact on Mississippi health care.

How much does the Balanced Budget Act of 1997 affect nursing homes? Plenty, say health care professionals.

Currently, the percentage of Mississippians over the age of 65 is 12%. By the year 2015, the percentage will jump to approximately 15%. Repercussions of the BBA, which reduces payments under Medicare to all hospitals in the U.S. by $115 billion dollars over five years, has fueled concern about who will foot the balance of medical bills.

Tim Thomas, administrator for the Newton County Hospital said the BBA “went after home health real hard, then skilled nursing facilities.”

“We had a skilled nursing facility and we obviously opposed the change,” said Thomas. “We opened a physical therapy department because the skilled nursing unit allowed us to bring in physical therapy since the department provided a lot of care to skilled nursing patients. After we got physical therapists in place, we started building outpatient volume. When the BBA changed reimbursement on skilled nursing facilities, that affected physical therapy, but we converted the skilled nursing unit to a swing bed program, which small rural hospitals can have. We can place a skilled patient in an acute care bed and treat like a nursing home for a short period of time, maybe three weeks, and it’s still cost-based.”

Many rural hospitals closed skilled nursing units and opted for swing bed units, he said.

“We got a little bit of a hit with reimbursement but it wasn’t like we lost a whole unit,” Thomas said.

H. J. “Jimmy” Blessitt, administrator for South Sunflower County Hospital in Indianola, said older residents often delay needed rehabilitation services because of a $1,500 annual cap on rehabilitation services.

“While my hospital does not have a nursing home, I am aware of a very unfortunate situation from the rehabilitation side of nursing home patients,” Blessitt said. “With the $1,500 per year cap on rehab services for nursing home patients, many in need of physical and occupational therapy are going without. On an annual basis, $1,500 does not go very far, and the therapist and patient are afraid to use up the money on many conditions that need treatment because they are afraid the patient may later on have a more serious event, such as a stroke, and there will be no resources for treatment. So we have some of the most vulnerable of our population going without needed treatment due to the fear caused by the BBA.”

Nicholas N. Owens, spokesman for NetCare Health Systems, a private health care company based in Nashville and established in 1995 by health care executives, said there haven’t been significant changes in strategy for reduction of long-term care and skilled nursing in rural hospitals at NetCare.

“Regarding skilled nursing care, we haven’t recognized serious consequences of the BBA,” he said. “But in some of our larger, urban facilities, none of which are in Mississippi, we have issues that we are certainly working toward making adjustments for our skilled nursing facilities.”

However, primarily as a result of the BBA, NetCare is selling four rural hospitals in its fourteen-hospital stable, Owens said.

“The sale is due to a corporate strategy to refocus resources to NetCare’s core operations which are in larger health care markets,” he said.

According to a study prepared by The Lewin Group and Horne CPA Group for the American Hospital Association, a new skilled nursing facility (SNF) prospective payment system (PPS) does not adequately recognize the cost of treating medically complex cases.

“The change in the payment methodology for skilled nursing facility services has resulted in many facilities not accepting those patients requiring more costly services,” the report read. “As a result, hospitals are seeing an increased length of stay for many Medicare patients that qualify for post-acute services in a skilled nursing facility but that require high-cost drugs or other services. This increased length of stay results in higher hospital costs with no additional payment. In many areas of the state, hospitals are at capacity and are unable to transfer patients to more appropriate post-acute care.”

The Mississippi Hospital Association and the American Hospital Association have recommended support of legislation to establish a pool of funds making additional payments available for costly medically complex SNF patients, enforcement of current Medicare conditions of participation for skilled nursing facilities that prohibit discrimination based on patient acuity and revision of the SNF PPS system to ensure adequate recognition of medically complex cases while not reducing payments for other cases.

Congress needs to fix the problem soon, said Sam Cameron, president and CEO of Mississippi Hospital Association.

“Some of the services that can no longer be provided…will end up costing more when patients wind up in acute care hospitals to receive these services, usually at a higher cost,” he said.

Contact MBJ contributing writer Lynne Wilbanks Jeter at lwjeter@yahoo.com or mbj@msbusiness.com.


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