Conclusions

Congress and HCFA recognized that certain services needed to be excluded from the SNF PPS rate to help ensure beneficiary access to appropriate care and to financially protect the SNFs that take care of high- cost patients. The criteria used to identify services— high cost, infrequently provided during a SNF stay, and not likely to be overprovided—and the services currently excluded appear reasonable. Although the criteria and current exclusions appear reasonable, questions remain about whether beneficiaries have appropriate access to services that are covered in the rate or whether additional services should have been excluded. A second concern is that Medicare coverage for excluded facility services has been shifted from part A to part B, which will increase beneficiary liability and limit the services considered for exclusion. In addition, beneficiary liability and program spending may increase because certain services are excluded only when provided in hospital settings, thus discouraging the use of less expensive, clinically appropriate sites of service. Finally, though providing important broad protection for beneficiaries, excluding services from the PPS rate when they are provided in emergency rooms may lead to overuse of this setting and could unnecessarily increase Medicare spending. CMS does not plan to collect data on all services provided to beneficiaries during their SNF stays. Without these data, CMS will be hampered in its efforts to update the exclusions over time. The lack of information about services provided to beneficiaries during their SNF stays will also severely limit efforts to refine the payment system. An analysis of which settings (for example, SNF, hospital outpatient department, ambulatory care, and emergency department) are used to deliver services to SNF patients is also important to ensure that services are provided at the most efficient and appropriate site.
What GAO Found

Congress and the Health Care Financing Administration recognized that certain services needed to be excluded from the skilled nursing facility (SNF) prospective payment system (PPS) rate to help ensure beneficiary access to appropriate care and to financially protect the SNFs that take care of high-cost patients. The criteria used to identify services--high cost, infrequently provided during a SNF stay and likely to be overprovided--and the services currently excluded appear reasonable. Even so, questions remain about whether beneficiaries have appropriate access to services that are covered in the rate or whether additional services should have been excluded. A second concern is that Medicare coverage for excluded facility services has been shifted from part A to part B, which will increase beneficiary liability. and program spending might increase because certain services are excluded only when provided in hospital settings, thus discouraging the use of less expensive, clinically appropriate sites of service. Finally, excluding services from the PPS rate when they are provided in emergency rooms may lead to overuse of emergency rooms, unnecessarily increasing Medicare spending. The Centers for Medicare and Medicare Services (CMS) does not plan to collect data on all services provided to beneficiaries during their SNF stays. Without these data, CMS will have difficulty updating the exclusions over time. The lack of information about services provided to beneficiaries during their SNF stays will also severely limit efforts to refine the payment system. An analysis of which settings (for example, SNF hospital outpatient department, ambulatory care, and emergency department) are used to deliver services to SNF patients is also important to help ensure that services are provided at the most efficient and appropriate site.