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PPS for Skilled Nursing Facilities Improves

Katherine M. Bennett

After months of acrimonious debate over the 2000 budget, Congress agreed to offer skilled nursing facilities (SNFs) better payments under the prospective pricing system (PPS).

SNFs, which previously received payments from the Health Care Financing Administration (HCFA) on a fee-for-service basis, now are responsible for funding virtually every service performed within their facilities in exchange for a preset price. 

The change—part of the Balanced Budget Refinement Act of 1999 signed by President Clinton—affects medication purchasing because separate payments for prescriptions ended under PPS. According to experts, establishing an accurate idea of ancillary costs will be a critical piece of the puzzle for SNFs under the PPS rules. 

The budget agreement also includes: 

  • A temporary increase in payments for certain high-cost Medicare patients, allowing for a 20 percent increase in federal per diem PPS payments for 15 categories of patients starting April 1, 2000; 
  • Authorizations for facilities to choose whether they want to immediately change to receiving Medicare payments based 100 percent on federal per diem rates; 
  • Cost pass-throughs to Medicare for certain ambulance services, prostheses, and cancer chemotherapy drugs; and 
  • Special consideration for facilities where most patients have compromised immune systems.
For more information, see the August 15, 1998, archived issue of AJHP.