There was minimal program oversight,  providing few checks on spending growth. Distribution of Patients Across Payment Categories Has Changed

Among patients primarily receiving rehabilitation care, more were  classified at their initial assessment into moderate rehabilitation payment  group categories and fewer into the intensive and low rehabilitation  categories since the implementation of PPS. Providers reported that the  payments for the moderate rehabilitation payment groups were more  favorable, relative to their costs, than other payment groups. More Patients Initially Categorized into Payment Groups with Payment Increases

Although the proportion of SNF Medicare patients initially classified into  rehabilitation payment group categories remained the same overall, the  distribution of patients within these categories changed considerably from  first quarter 1999 to first quarter 2001 (see table 1). Among the patients initially classified into the extensive and special care  or clinically complex categories (all of which were increased 20 percent by  BBRA), the share of patients initially assessed as requiring the most  intensive care—those in the extensive services category—increased to  become about two-thirds of patients in these categories, while the share of  patients in the special care and clinically complex categories decreased. Two years later, less than 13 percent received  this much therapy. In 1999, 5 percent of patients initially assessed in the  high rehabilitation payment group category received 480 minutes or more  of therapy per week. SNFs have   (1) changed their patient assessment practices and (2) reduced the amount  of therapy services provided to Medicare beneficiaries.
What GAO Found

In 1998, the Health Care Financing Administration implemented a prospective payment system (PPS) for skilled nursing facility (SNF) services provided to Medicare beneficiaries. PPS is intended to control the growth in Medicare spending for skilled nursing and rehabilitative services that SNFs provide. Two years after the implementation of PPS, the mix of patients across the categories of payment groups has shifted, as determined by the patients' initial minimum data set assessments. Although the overall share of patients classified into rehabilitation payment group categories based on their initial assessments remained about the same, more patients were classified into the high and medium rehabilitation payment group categories, and fewer were initially classified into the most intensive (highest paying) and least intensive (lowest paying) rehabilitation payment group categories. Two years after PPS was implemented the majority of patients in rehabilitation payment groups received less therapy than was provided in 1999. This was true even for patients within the same rehabilitation payment group categories. Across all rehabilitation payment group categories, fewer patients received the highest amounts of therapy associated with each payment group.