Final inpatient rehabilitation PPS rule improves on proposed rule: The final inpatient rehabilitation PPS rule eliminates deficiencies of the proposed PPS rule, but does not completely remove the risk that underpayments will occur - Centers for Medicare and Medicaid Services releases new prospective payment systems regulations - Statistical Data Included

Healthcare Financial Management, Oct, 2001 by Max Reynolds

On August 7, 2001, the Centers for Medicare and Medicaid Services (CMS--formerly HCFA) released the final rule for a new prospective payment system (PPS) for inpatient rehabilitation services describing the process that must be used to receive payment for such services provided to Medicare beneficiaries. The process consists of five steps: First, a clinician performs assessments of the patient upon admission and at discharge. Second, the patient is classified into a case-mix group (CMG) with an assigned relative-value weight within that CMG. Third, the Federal prospective payment rate is determined by multiplying the relative-value weight by an annually updated, budget-neutral conversion factor. Fourth, the Federal prospective payment rate is adjusted to account for facility-specific factors. Finally, the facility-adjusted payment rate may be adjusted for case-specific factors. The final rule eliminates three deficiencies in the proposed rule by providing increased payment for treating any comorbidities docum ented prior to the second day before discharge, providing more appropriate payment for transfer cases, and minimizing the paperwork associated with patient assessment.

On August 7, 2001, the Centers for Medicare and Medicaid Services (GMS--formerly HGFA) published a final rule implementing a prospective payment system (PPS) for inpatient rehabilitation facilities. (a) The inpatient rehabilitation PPS will be effective for cost-reporting periods beginning on or after January 1, 2002, and inpatient rehabilitation facilities will have the option of electing immediate or phased transition to this new payment methodology.

Background

In 1984, the Medicare program implemented a PPS for hospital inpatient services. The PPS established fixed-fee payments for various services provided by acute care hospitals based upon the patient's primary diagnosis. Congress exempted inpatient rehabilitation facilities and other postacute care providers from this PPS because it recognized that in a postacute care setting, patients with the same diagnosis may have very different resource needs, making it difficult to identify a fixed payment amount that would adequately cover the costs of care for all of these patients.

Thus, the Medicare program generally continued to pay postacute care providers on a cost basis for the reasonable costs they incurred in providing services to individual beneficiaries (limited, in the case of postacute hospitals, to a facility-specific target amount per discharge imposed by the Tax Equity and Fiscal Responsibility Act of 1982).

Following implementation of the hospital inpatient PPS, acute care hospitals sought to minimize their costs relative to their fixed-fee payment by discharging patients as early as possible to postacute care settings. As it became apparent that an increasing proportion of Medicare funds were being used to pay for postacute care, Congress reversed course and mandated implementation of PPSs to promote more efficient care in postacute settings. In addition to the final rule implementing the inpatient rehabilitation PPS, final rules also have been promulgated for skilled nursing facilities and home health agencies.

Inpatient Rehabilitation PPS Provisions

Payment under the inpatient rehabilitation PPS will depend upon execution of a specifed process.

First, a clinician must perform a comprehensive assessment of the patient upon admission and again at discharge. Each assessment must be based upon direct observation of and communication with the patient and may be supplemented with information from other sources, such as the patient's family or other clinicians.

The assessments must be documented using a prescribed patient assessment form, which GMS derived from a standard assessment form, the Uniform Data Set for Medical Rehabilitation (UDSmr), already used by inpatient rehabilitation facilities nationwide. The UDSmr-derived form requires disclosure of demographic data regarding the patient, measurement of the patient's functional independence in numerous settings, and diagnosis of any comorbidities.

After the patient's discharge, the admission and discharge assessments must be transmitted together electronically to CMS within prescribed deadlines. Failure to meet these deadlines may result in a reduction in Medicare payment of about 75 percent for the case.

Second, each Medicare patient must be classified into a case-mix group (CMG) based upon the data contained in the initial patient assessment relating to age, type of impairment, motor skills, and cognitive function. Within a given CMG, a case will be assigned a relative-value weight, indicating whether the patient has a high-, moderate-, or low-acuity comorbidity, or no comorbidity at all. The assigned relative-value weight is intended to reflect the level of resources required to treat a patient in the CMG relative to the "average" inpatient treated in an inpatient rehabilitation facility For example, the relative-value weight (assuming no comorbidity) is 2.0 for a patient in CMG 205 (traumatic brain injury with low motor function) and 1.0 for a patient in CMG 1602 (pain syndrome with low motor function). Thus, CMS expects that an inpatient rehabilitation facility will utilize about twice the resources to treat the former patient as the latter patient.