Inpatient Rehabilitation Facility Payment Rate Updates and Coverage Requirements Clarifications

04 August 2009 Publication
Author(s): Judith A. Waltz

American Health Lawyers Association

By Judith A. Waltz

On July 31, 2009, the Centers for Medicare & Medicaid Services (CMS) issued a final rule (Final Rule) to update payment rates and policies under Medicare's Inpatient Rehabilitation Facility (IRF) Prospective Payment System (PPS). The payment rate updates apply to discharges which occur on or after October 1, 2009. The rule is scheduled to be published in the August 7, 2009, edition of the Federal Register, but was placed on display at the Office of the Federal Register's Public Inspection Desk and will be available under Special Filings.

The Final Rule also clarifies coverage requirements for inpatient rehabilitation services. For these provisions, CMS has adopted
a January 1, 2010, effective date. CMS also plans to rescind its prior IRF coverage policies, contained in a ruling (HCFAR 85-2-1) issued by CMS following notice in the Federal Register. The effective date of rescission will be January 1, 2010, to track the new coverage criteria established in this Final Rule. New manual provisions will also be drafted for inclusion in the Medicare Benefit Policy Manual.

Payment Provisions in the Final Rule
A covered IRF stay is reimbursed by a prospective payment to the IRF based on the relative amount of resources that would typically be required to treat the patient's medical conditions and provide services intended to restore or maximize physical function. Each patient is assigned to a case mix group and a tier in that group, which when taken together are assigned a relative weight that is the basis for the payment rate. Additional adjustments occur for facility factors such as teaching status, geographic wage index, and the percentage of low-income patients.

The Final Rule includes several revisions to IRF payments, as summarized below:

  • A Market Basket Update of 2.5%;
  • Case Mix Group relative weight and length-of-stay updates to reflect FY 2008 claims data and other recently available information;
  • High-Cost Outlier Threshold for FY 2010 set at $10,652;
  • A Wage Index Adjustment based on final wage data for FY 2009;
  • Facility Level Adjustments for rural, low-income patients, and teaching status factors using data for FYs 2006-2008; and
  • A new requirement for submission of Medicare Advantage Patient Assessment Data (to be used in calculating the IRF's compliance percentage for the 60 Percent Rule, which requires that at least 60% of the IRF's patients have at least one of thirteen specified conditions as the principal admitting diagnosis or as a secondary diagnosis.)

Coverage Provisions in the Final Rule
In response to concerns reflected in comments to the Proposed Rule, CMS emphasized that the new coverage criteria are designed to assess patients, not facilities. In other words, the coverage criteria are not intended to change the criteria for determining whether a facility meets the 60 Percent Rule discussed above, or otherwise threaten an IRF's classification. To underscore this distinction, CMS moved the coverage criteria to a newly created section of the regulations.

The Final Rule emphasizes the role of a rehabilitation physician (who has specialized training and experience in rehabilitation services) in ordering IRF services and providing ongoing oversight of each beneficiary's care. Among other things, the rehabilitation physician must review and concur with the admission.

A summary of other key provisions follows:

Preadmission Requirements: Each candidate for IRF care must undergo a comprehensive preadmission screening conducted by a licensed or certified (i.e., qualified) clinician or clinicians designated by a rehabilitation physician (that is, a licensed physician with special training and experience in rehabilitation medicine) no more than forty-eight hours before admission to the IRF. The Final Rule also permits this screening to be performed more than forty-eight hours prior to admission, if updated by a brief, in-person or phone update within the forty-eight hours preceding the admission. Several specific documentation requirements are set forth for the preadmission screening.

Post-Admission Requirements: Within twenty-four hours of admission, the rehabilitation physician must perform a post-admission evaluation to verify that the information obtained during the preadmission screening is accurate, identify any relevant changes since the preadmission screening, and begin development of an overall plan of care designed to meet the individual patient's needs.

Individualized Overall Plan of Care: An individualized overall plan of care must be developed by a rehabilitation physician with input from the interdisciplinary team within four days of the patient's admission. The interdisciplinary team will include: a rehabilitation physician; a registered nurse with specialized training or experience in rehabilitation; a social worker or a case manager (or both); and a licensed or certified therapist from each therapy discipline involved in treating the patient. The interdisciplinary team must meet at least once a week.

Care Plan Implementation: A rehabilitation physician or other licensed treating physician with specialized training and experience in inpatient rehabilitation must conduct face-to-face visits at least three days per week throughout the patient's stay.

On July 31, 2009, CMS issued a Press Release, entitled "CMS Announces Fiscal 2010 Payment and Policy Updates for Inpatient Rehabilitation Facilities: New Rules Clarify and Strengthen Patient Selection and Care Requirements." CMS has also published two Fact Sheets relating to the Final Rule; (1) Medicare Payment Updates for Inpatient Rehabilitation Facilities in Fiscal 2010; and (2) CMS Adopts Inpatient Rehabilitation Facility Coverage Requirements. 

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