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May 25, 2010

Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2009

Proposed Rule

Score: 14 / 60

RULE SUMMARY

This proposed rule would update the payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs) for fiscal year (FY) 2009. In addition, it would recalibrate the case-mix indexes so that they more accurately reflect parity in expenditures related to the implementation of case-mix refinements in January 2006. It also discusses our ongoing analysis of nursing home staff time measurement data collected in the Staff Time and Resource Intensity Verification (STRIVE) project. Finally, the proposed rule would make technical corrections in the regulations text with respect to Medicare bad debt payments to SNFs and the reference to the definition of urban and rural as applied to SNFs.

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Criterion	Score
Openness
1. How easily were the RIA , the proposed rule, and any supplementary materials found online? The link to the proposed rule containing the RIA is five clicks from the home page. Click on "regulations" (intuitive). The rest is unintuitive: click on "other regulations," expand the "detail" list, click on "CMS regulations," and then click on "quarterly provider updates - regulations" and select the update list from the period covering the date of the regulation. It can also be found on regulations.gov using the RIN.	4/5
2. How verifiable are the data used in the analysis? Tables are present for some of the figures, but they are not verifiable from any explicit source. The analysis used some data, but not enough information was given for a reader to verify the data. A specialist who knows this issue well could probably verify the data.	1/5
3. How verifiable are the models and assumptions used in the analysis? The language is too technical to verify the models and assumptions used in the analysis if they are verified at all. It is impossible for the reader to verify the models or assumptions used. A specialist who knows this issue well could probably verify.	1/5
4. Was the analysis comprehensible to an informed layperson? The general idea—that they're updating payment rates using various factors that are probably relevant—is clear. It is unclear what the analysis actually means (the analysis was very difficult for the reader to understand, heavy on acronyms, profuse usage of unexplained technical jargon). The paper is not well organized and difficult to follow.	1/5
Analysis
5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?	0/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life? Does nothing but adjust payment rates and report how these affect providers in various regions. The data and conclusion are so raw that it's impossible to determine the desired outcomes--they aren't defined at all. This is the conclusion drawn off the RIA: "Overall estimated payments for SNFs [skilled nursing facilities] in FY 2009 are projected to decrease by 0.3 percent compared with those in FY 2008. We estimate that SNFs in urban areas would experience a 0.3 percent decrease in estimated payments compared with FY 2008. We estimate that SNFs in rural areas would experience a 0.2 percent decrease in estimated payments compared with FY 2008. Providers in the urban Pacific region and the rural Pacific region show increases in payments of 1.0 and 0.9 percent, respectively."	0/5
Does the analysis identify how these outcomes are to be measured? The analysis does not address this topic.	0/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes? The analysis does not address this topic.	0/5
Does the analysis present credible empirical support for the theory? The analysis does not address this topic.	0/5
Does the analysis adequately assess uncertainty about the outcomes? The analysis does not address this topic.	0/5
6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?	0/5
Does the analysis identify a market failure or other systemic problem? No, its purpose is merely an adjustment of a pre-existing law or condition. The market failure evidence of this law or condition isn't explained either.	0/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal? The analysis does not address this topic.	0/5
Does the analysis present credible empirical support for the theory? The analysis does not address this topic.	0/5
Does the analysis adequately assess uncertainty about the existence or size of the problem? The analysis does not address this topic.	0/5
7. How well does the analysis assess the effectiveness of alternative approaches?	1/5
Does the analysis enumerate other alternatives to address the problem? The analysis explicitly declines to examine most alternatives because legislation provides no discretion. The options that may have been considered aren't really elaborated upon: "We considered various options for implementing the revised case-mix adjustment. For example, we considered implementing partial adjustments to the case-mix indexes over multiple years until parity was achieved. However, we believe that these options would further delay moving to the most appropriate payment amounts. Moreover, in anticipation of the possible changes resulting from STRIVE in the RUG–III structural model and the CMIs used in payment, we believe it is important for the recalibration to be entirely completed beforehand, in order to ensure stability in the base as we move forward with these other changes. We also considered introducing new case-mix weights derived from the STRIVE time study data. However, our initial analyses show that it would be more efficient and less burdensome to providers to introduce any new case mix weights as part of an overall restructuring of the RUG–III model that is currently scheduled for October 2009."	1/5
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)? No range or relevant content of this exists.	0/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved? The analysis does not address this topic.	0/5
Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future? No, but it does mention the prior year's payment rates used under the prospective payment system (PPS) for skilled nursing facilities. This is the only evidence of what a base year for the next FY would look like. This is perfunctory and not explicitly stated or cited.	1/5
8. How well does the analysis assess costs and benefits?	1/5
Does the analysis identify and quantify incremental costs of all alternatives considered? The analysis estimates the change in cost to the government.	2/5
Does the analysis identify all expenditures likely to arise as a result of the regulation? The monetary costs are identified in the accounting statement. This is some relevant discussion with some documentation of analysis.	2/5
Does the analysis identify how the regulation would likely affect the prices of goods and services? Only in the sense that it recalculates the rates government will pay for services. The discussion is not in the RIA; instead, it's earlier on in the regulation: "SNF market basket index that reflects changes over time in the prices of an appropriate mix of goods and services included in covered SNF services. We use the SNF market basket index to update the Federal rates on an annual basis." A few comments in the rule acknowledge that the payment system may alter incentives and costs, but it offers no systematic treatment of this issue.	1/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation? No, "The impact analysis of this proposed rule represents the projected effects of the changes in the SNF PPS from FY 2008 to FY 2009. We estimate the effects by estimating payments while holding all other payment variables constant. We use the best data available, but we do not attempt to predict behavioral responses to these changes, and we do not make adjustments for future changes in such variables as days or case-mix."	0/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis? The analysis does not address this topic.	0/5
Does the analysis identify the alternative that maximizes net benefits? The analysis does not address this topic.	0/5
Does the analysis identify the cost-effectiveness of each alternative considered? The analysis does not address this topic.	0/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs? An informative table shows how the new payment methods will affect providers in different parts of the country.	3/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits? The analysis does not address this topic.	0/5
Use
9. Does the proposed rule or the RIA present evidence that the agency used the analysis? The agency asserts that the RIA was used, but there is little evidence for this. The analysis was used only in the sense that the calculations determined how mcuh the government will pay.	3/5
10. Did the agency maximize net benefits or explain why it chose another alternative? No, the agency doesn't maximize net benefits or explain why it chose another option. It may be possible to calculate net benefits, but this is not done at all and not explained.	1/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future? Since the analysis never really identifies intended outcomes, there is no relevant content.	0/5
12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so? Only cost data is included.	1/5

Total	14 / 60

Additional details

Agency: Department of Health and Human Services
Regulatory Identification Number: 0938-AP11
Agency Name: Department of Health and Human Services
Rule Publication Date: 05/07/2008