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CMS Proposes Payment Boosts to Home Health Agencies, Skilled Nursing Facilities

By CQ Staff

July 27, 2006 -- The Centers for Medicare and Medicaid Services announced a proposal Thursday to increase payment rates to home health agencies 3.1 percent in 2007. To obtain the payment increase, which would bring $460 million in added payments next year, agencies must submit data on the quality of care they provide, CMS said in a press release. Agencies that fail to submit the data would receive an increase of only 1.1 percent. The proposal pays slightly different amounts to rural and urban agencies that provide quality data. Rural agencies would get 3.3 percent more, urban agencies would get 3.1 percent more.

The proposed rule also revises payment for two categories of medical products: oxygen equipment and certain types of durable medical equipment that are rented. "We want to make sure that our payments for oxygen are appropriate to ensure beneficiary access to the latest technologies and that we are not paying rental amounts that exceed the cost of purchasing oxygen equipment many times over," McClellan said.

Medicare skilled nursing facility payments will increase $560 million in 2007, CMS also announced Thursday. The 3.1 percent increase will go to the care and rehabilitation of Medicare beneficiaries recovering in nursing facilities from serious health problems. The new payment rates include a special adjustment to cover nursing home residents with HIV/AIDS.

The proposal also includes a plan to make payments for post-acute care consistent regardless of the type of where the service is delivered. Other initiatives in the proposal aim to foster use of health information technology and the availability to consumers of more information on the price and quality of skilled nursing facility services.

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