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

Second, the final rule minimizes the outlier payments available to defray costs incurred in treating patients requiring unusually costly care. According to CMS, outlier payments are designed to reduce the admittedly substantial financial risk that high-cost cases pose for inpatient rehabilitation facilities, given their relatively small size. Unlike acute care hospitals, many rehabilitation facilities are too small to be able to compensate for losses from such cases by spreading the losses over a large volume of inpatient admissions.

Congress authorized CMS to establish such outlier payments under the inpatient rehabilitation PPS up to an amount equivalent to 5 percent of total payments. CMS, however, limits such payments to an estimated 3 percent of total payments. In effect, CMS has chosen to reserve a substantially smaller pool of funds to compensate inpatient rehabilitation facilities for treating high-cost cases.

Conclusion

The new inpatient rehabilitation PPS ultimately should serve to promote efficiency in the furnishing of inpatient rehabilitation services to Medicare beneficiaries. Nonetheless, upon implementation, providers and regulators should monitor whether inpatient margins for high-acuity patients, such as those recovering from severe strokes or major trauma, vary substantially from those for lower-acuity patients, such as those with orthopedic injuries or non-traumatic impairments. To the extent that substantial disparities develop between these two categories of cases, it is possible that inpatient rehabilitation facilities will focus more on developing programs and facilities for lower-acuity patients, potentially creating a substantial underserved population among those with severe impairments.

ABOUT THE AUTHOR

Max Reynolds, JD, is an attorney, health law practice group, ShawPittman LLP, Washington. D.C., and a member of HFMA's Washington Metropolitan chapter.

(a.) "Medicare Program; Prospective Payment System for Inpatient Rehabilitation Facilities; Final Rule," Federal Register, August 6, 2001, pp. 41315-41430.

(b.) "Medicare Program; Prospective Payment System for Inpatient Rehabilitation Facilities; Proposed Rule," Federal Register, November 3, 2000, pp. 66303-66442.