Gatekeepers or PCP ModelsA gatekeeper is a primary care physician (PCP).Primary care physicians can be family practitioners, generalpractitioners, or pediatricians who are responsible forauthorizing other services for a defined panel of patientsassigned to the gatekeeper or PCP. Compensation to the PCPis linked in some way to the cost of the services used <strong>by</strong> thePCP’s patients. Gatekeepers are most often used <strong>by</strong> HMOsto control the usage of specialty services. Usually, a patientcannot be referred to a specialist without the gatekeeper’sauthorization. Gatekeeper arrangements have generallybeen found to be very effective in controlling costs.However, many patients don’t like these arrangements.Benefit Coverage LimitationsManaged care organizations also control costs <strong>by</strong>limiting the types of products used and the extent of servicesprovided. Some limitations are specified in plan documentsdistributed to patients. For example, a plan’s benefit may belimited to five homecare visits for enteral patients or 20skilled nursing facility days. Other limitations are matters ofpolicy that are only communicated when a treatmentauthorization request is received. A managed careorganization may have a policy of not paying for a particulartype of enteral pump because they are perceived to be moreexpensive than gravity administration. This restriction wouldnot appear in any plan documentation. You should clarify anybenefit coverage limitations prior to initiation of treatment.May, 2002 9
SECTION III – MEDICARE BILLING FOR ENTERAL PRODUCTS INSKILLED NURSING FACILITIES (SNFS)Skilled nursing facilities can bill Medicare, Medicaid,private indemnity or managed care payers for theirservices. Medicare covers SNF services through Part A fora period of 100 days per episode of illness, despite howsick a patient may be during this course of illness. A benefitperiod starts in the hospital for a period of at least threedays. The benefit period ends with discharge from theskilled nursing facility. If the patient is not in the hospitalor SNF for 60 consecutive days, the patient may qualify fora new benefit period assuming all of the required criteriaare met. In order to qualify for Part A Medicare benefits inan SNF, all of the following criteria must be met:❏❏❏❏❏❏The patient has been in the hospital for at leastthree consecutive days or 72 hours for acondition to be considered “medicallynecessary” <strong>by</strong> MedicareThe patient must have been discharged within30 days following this hospitalizationThe patient will be treated for either the samecondition that was present at the time ofdischarge or the medical condition that aroseduring the hospital stayThe patient requires skilled nursing care orrehabilitation services (e.g., physical therapy)every day they are in the SNFThe services can only be delivered <strong>by</strong> the SNF(i.e., they can’t be cared for at home)The SNF providing the services is MedicareCertified (SNFs typically have a Medicaredistinct unit that is certified)REIMBURSEMENT OVERVIEWMedicare reimbursement represents an average of10% of the typical SNF’s payment mix. Traditionally,SNFs have been paid on a cost-related basis throughMedicare Part A for their services. With escalatingMedicare expenditures for SNF services, the federalgovernment passed the 1997 Balanced Budget Act (BBA)which moved SNF reimbursement from a cost basis to aProspective Payment System (PPS).Prior to the BBA, Medicare reimbursed skillednursing facilities on three different levels based on thethree major components of costs – routine operatingexpenses, ancillary services, and capital expenses. Ingeneral, routine operating services were paid on an actualcost basis up to a per diem limit; ancillary services werepaid on a reasonable cost basis; and capital expenses werepaid on a pass through basis. Separate cost limits wereapplied to hospital-based and freestanding SNFs and tourban and rural SNFs. New providers were exempt fromthese limits for the first three years of operation. Facilitiescould receive exemption payments if they could10demonstrate that their Medicare case mix was sufficientlyhigher than average to warrant higher payments.Ancillary services costs, however, constituted agrowing share of SNF expenditures. This growth wasbecause ancillary services were not subject to a per diemcost limit and were rarely reviewed <strong>by</strong> Medicare. Mostancillary services were reimbursed under Part A.However, ancillary services could be reimbursed underMedicare Part B if they were not directly furnished <strong>by</strong> theSNF or if patients were not covered <strong>by</strong> Part A. In general,the different accounting systems for Part A and Part Bmean that Medicare could not readily monitor totalprogram spending for the SNF patients.The Prospective Payment System (PPS) went intoeffect in July of 1998, and the BBA moved skilled nursingfacilities into a per diem prospective payment system. ThePPS rates cover routine, ancillary and capital costs. Thisincludes items and services for which payment hadpreviously been made under Part B with a few exceptions(e.g., physician and psychologist services). Under the newsystem, an SNF receives a payment that is derived from ablend of a case mix-adjusted Federal Rate and a facilityspecificrate based on the facility’s historical costs. Thisblend begins in the SNF’s first fiscal year after July of1998. Also, it changes over a three year period in a waythat weights the Federal Rate ever more heavily withpayments reflecting 25% of the Federal Rate in the firstyear, 50% in the second year, 75% in the third year and100% thereafter.Separate rates were derived for SNFs in urban andrural areas, and further adjustments were made ofgeographic variations in wage rates and case mix. TheFederal Rates also adjusted to account for a facility’s casemix using a resident classification system (ResourceUtilization Groups III). Exception payments for case mixare eliminated from the Federal Rate.Facility-specific rates are based on fiscal year 1995cost reports, trended forward. Those rates are updatedfrom 1995 <strong>by</strong> the SNF market basket percentage increaseminus one percentage point. Included in the facilityspecificper diem rate is an estimate of the amount payableunder Part B for covered SNF services furnished duringfiscal year 1995. In contrast to the Federal Rates, facilityspecificrates include exceptions to the routine cost limits.The BBA also provided for a Consolidated Billingmeasure. This meant that essentially all Medicare claims forservices delivered in the SNF (including those billed underPart B) be submitted <strong>by</strong> the SNF, regardless of whether theservice was provided <strong>by</strong> the in-house staff or externalentities (e.g., independent therapists). Consolidated Billingrequirements were to be effective for SNF residents whosestays are covered under Part A. These measures wereintended to secure a full accounting for all costs associatedMay, 2002
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