Dear Secretary Thompson:
I write to comment on your proposed rule, which considers an adjustment to the annualupdate for skilled nursing facilities (SNFs) that would account for forecast errors. My understandingis that this would result in increased payments to these facilities of $450 million in FY 2004, $2.9billion over five years, and almost $6.9 billion over the next ten years. While there may beagreement among actuaries and some analysts that such an adjustment is warranted to account forpast forecast errors in the payment rates, and that the Centers for Medicare and Medicaid Services(CMS) currently makes this type of adjustment in other existing payment systems, I have severalconcerns about adopting such a mechanism.
I strongly agree with the statement on page 34769 that "it is absolutely essential that theadjustment be applied uniformly--not only in those instances where the forecasted percent changeis lower than the actual percent change..., but also in those instances where the forecasted percentchange is higher than the actual percent change." I am concerned, however, that SNF providers donot fully recognize the possible downward effect this policy could have on future payments, whichcould result in a net decrease in payment rates. As you state, this policy of uniformity, which Isupport, would introduce significant uncertainty into the prospective payment system, making it verydifficult to plan for future activities.
Secondly, the correction for forecast error should be applied uniformly to all prospectivepayment systems throughout Medicare where the agency has the authority to do so. I understand thatthis authority exists for some prospective systems, but not for others. Consequently, if thisadjustment is made to skilled nursing facilities' prospective rates, it should be applied to otherpayment systems in a uniform manner. I look forward to your assessment of the agency's authorityin this area with respect to other prospective payment systems.
Finally, I object to such an adjustment, which would substantially increase SNF payments,without a strong commitment from CMS to direct skilled nursing facilities to use the additionalpayments for direct care services provided to nursing home residents. Specifically, I expect CMSto devise and implement a plan to improve quality, beyond the agency's current initiatives, throughmore aggressive direction and evaluation relying on guidance and instructions to monitor how theadditional payments are being used by SNFs to improve direct patient care.
Thank you for the opportunity to comment on this proposed rule.
Sincerely,
Charles E. Grassley Chairman
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Source: Ranking Member’s News
