Health Care Reform Implications: SNFs

The following is a summary of the major provisions in the recently passed health care reform bill.  Please note: I have not attempted to cover every nuance in detail but to provide a highlight for a point of reference.  If any reader has additional questions or wants additional insight on any particular provision, please let me know.  You can find my contact information in the page titled “Author”.

  • No targeted elimination or reduction in the market basket for 2010 and 2011.
  • Incorporation of a Productivity Adjustment (offset to the market basket) – 2012 (Fiscal year begins Oct. 1, 2011). Estimated payment impact of minus 1% to update.
  • Implementation of RUG-IV pushed back to Oct. 1, 2011 but  concurrent therapy requirements and MDS 3.0 take effect Oct. 1, 2010.
  • Implementation of new transparency requirements (disclosure of ownership) and compliance plan requirements.
  • Extension of therapy cap exception process to Dec. 31, 2010.
  • Creation of a new Independent Medicare Advisory Board charged with recommending to Congress, payment and spending reforms for Medicare.  SNFs, unlike Hospitals (exempt to 2019) are not exempt.  The Board will make recommendations to Congress for approval or disapproval.
  • By 2013, the Secretary of HHS is charged with developing a bundled payment pilot program for post-acute services.  Essentially, all providers within the episode of care (hospitals, physicians, SNFs, home health, etc. as applicable) will received one payment for all care services provided per episode covering a period three-days prior to hospitalization through 30 days post hospital discharge.  Participation in the program is voluntary.
  • Additional background check requirements for employees and contractors with access to direct patient contact.
  • Establishment of a new GAO study on the Five Star Quality Rating system.
  • Required reporting of nursing home staffing levels including use of contract/agency staff.


  • Inclusion of the Wyden MedPac language requiring that Medicaid must be taken into account during the analysis of provider reimbursements for SNFs (impacts Medicare payments, theoretically)
  • Requires states to implement the Medicaid expansion requirements under the law with respect to provider payment changes (physicians), quality improvement, benefit enhancement, eligibility, etc. as a condition of continuing to receive federal Medicaid matching payments. * The reason I included this provision is that states are already burdened within their Medicaid programs for determining eligibility, etc. and additional burdens may negatively impact SNFs waiting for eligibility determinations on Medicaid status. Longer waits for determination and pre-certifications mean longer waits for payment and more billing work for the SNF.
  • Coverage expansions under Medicaid and enhanced payments are financed 100% through 2014 and 91% in 2015 (begins Jan. 1, 2013).  Optional coverage expansions are not fully financed.  * The reason I included this provision is states are already balking at the amount of additional expense Medicaid expansion is adding to their already under-funded Medicaid programs.  Even with an extension of the enhanced FMAP, states are still in the hole as the enhanced FMAP could not be used for CHIP expansion costs and had to be gained principally through additional state spending.  See my post on Medicaid and Health Care Reform at or alternatively, the Health Reform Updates page on my firm’s E-News site as there is a blurb on Medicaid


  • Separate reporting on Medicare cost reports of spending on direct care.
  • Independence at “home” demonstration project which coordinates long-term expenditures with support services in the home.
  • Expansion of funding for home and community based services/programs.
  • Creates three years of new funding for additional training programs for direct care workers providing long-term care services.
  • Establishes funding for geriatric education centers for training in chronic care management and geriatrics.
  • Increases nursing education loan repayments and removes the caps on funding for nurses working on advanced degrees in nursing.
  • Provides for the Community First Choice option allowing for coverage of personal attendant (non-skilled) services in the home plus provides equal spousal income protection provisions under Medicaid for persons receiving Medicaid covered, home-and-community based services.
  • Provides a $250 payment for seniors covered under Medicare D who hit the “donut hole” in 2010.  Completely eliminates the “donut hole” under Medicare D for brand and generic drugs by 2020.
  • Establishes the Elder Justice Act which provides grants for additional protection of nursing home residents and establishes incentives for persons to work in SNF setting.
  • CLASS Act provision adopted.  Creates the Community Living Assistance and Support Services program that allows individuals to voluntarily purchase a form of long-term care insurance that provides daily payment of $50 to $100 per day for community based support services, in-home care, etc. in the event the individual becomes disabled.  Benefits can only be paid if disability occurs five years or more post the start of premium payments.  Premiums will be deducted from the individual’s pay-check.
  • Eliminates the cost-share under Medicare D for dual eligible (Medicare and Medicaid) individuals receiving Medicaid covered home-and-community based services.  Dual eligible individuals in a nursing home are already exempt from paying the Medicare D cost share.

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