PPS for RehabilitationPPS for RehabilitationImplementationImplementation

IssuesIssues

November 2001

Brian EllsworthSenior Associate Director

American Hospital Association

Washington Report…

CMS’ Final Rule: AHA concerns about paperwork were addressed

• Inpatient Rehabilitation Facility Patient Assessment Instrument (IRF-PAI)…a victory for the field MDS-PAC not implemented 2 assessments only (admission and

discharge) Any clinician may complete No attestation required Reduced penalty for late completion

Payment methodology – original AHA concerns

Medical Complexity

• AHA: Payment system falls short in recognizing medically complex cases CMG compression Shortfalls from transfer

policy Inadequacy of outlier

payment

Payment methodology: AHA concern & CMS response

CMG Compression

• AHA: Remedy compression of the case mix weights

• CMS: Added 10% to payments CMI > 1 Adjusted for multiple co-morbidities

using a 3-tiered approach Offset by reduced payment to cases with

CMI < 1, short stay “outliers,” and 4 CMGs for deaths

Payment methodology: AHA concern & CMS response

Transfers

• AHA: Eliminate (or narrow the scope of) the

transfer policy, particularly with respect to medically complex patients

At a minimum, pay 150 percent for the first day’s care under any transfer policy

• CMS: No change in policy on scope First day payment at 150%

per diem

Payment methodology: AHA concern & CMS response

Disproportionate Share Payments (DSH)

• AHA: Revise DSH policy and formula to avoid wide payment variations

• CMS: New formula results in smaller adjustments

No threshold established to qualify for payments Average adjustment < 20%

• Relabeled Low Income Patient Adjustment (LIP)

Payment methodology: AHA concern & CMS response

Outlier Policy

• AHA: Change outlier in sync with recommendations on medically complex

• CMS: Outlier set at 3% of total pool Outlier threshold increased from $7066 to $11,211 Payment set at 80% of threshold (after

adjustments) Payment for the short-stay “outlier” CMG (less or

equal to 3 days) reduced from .1908 to .1651

Payment methodology: AHA concern & CMS response

• AHA: Interrupted stay policy too broad

• CMS: No policy change Patient who returns to rehab within 3 days

of acute care stay will result in a single CMG case payment

Acute care hospital eligible for DRG if patient stays longer than 1 day

Other Payment System Features

• Impact estimated to cost CMS $70 million over two years. No future estimates of net effects.

CMS’ Projected Impact of Fully Phased-In PPS

Facility Type # of cases# of

facilitiesNew payment to current

payment ratio

All Facilities 347, 809 1,024 1.00

Freestanding hospital 114,376 168 0.96

Unit of acute hospital 233,433 856 1.02

Large urban 163,970 489 1.01

Other Urban 152,647 392 0.99

Rural 31,192 143 1.00

Mid-size Teaching Program 15,741 38 0.97

Final Rule: Other Payment System Features

• Conversion factor/standardized amount increased from $6024 to $11,838

• Behavioral Offset increased slightly from .064 to 1.16

• Labor-related share (for wage index adjustments) increased slightly from to from 71% to 72.4%

• Rural adjustment increased from 15% to 19%

• No IME adjustment

Other Policy Issues

• No change in 75% rule for admissions falling into top 10 diagnoses

• No waiting period for SNF conversions (unlike 12-month wait for acute care facilities)

• Not incorporating recent wage area geographic reclassifications

Payment methodology: issues for the future

• Comorbidities vs. complications

• Will payment be adequate for really high cost cases? – outliers, compression

• Error rates on RICs, patients with multiple RICs

• Use of “not observed” code (0)

• Presence of “upcoding”

• Impact of medical education programs on costs per case

• Interrupted stays, transfers

Developments Since the Final Rule

• OMB approved the IRF-PAI on September 13, 2001 AHA had submitted two comment letters on

assessment instrument Questioned intended uses of non-payment items OMB limited its approval to those items with a

demonstrated use

• Implementation schedule announced Training Interim training manual Field-testing of billing system

Inpatient Rehabilitation Facility – Patient Assessment Instrument

• “Interim Training Manual” released

• Changes to be made in final version of the manual comorbidities (question 24) to be coded as secondary

condition at or after admission (except last two days) complications (question 47) to be coded as

secondary condition after admission (except last two days)

Medical Needs and Quality Indicators sections are voluntary until further notice

Interim training manual… known changes (continued)

• Impairment groups (Appendix B of the manual) not consistent with Chart 5 of the final rule – will be modified

• Comorbidities list (Appendix C of training manual) – not complete in manual, refer to Appendix C of final rule for complete list

• Program interruption dates – check final rule preamble for CMS policy

• CMS will clarify sources of information for IRF-PAI

• Privacy and confidentiality

IRVEN: CMS Data Entry Software

• www.hcfa.gov/medicare/irven.htm

• IRFs may use IRVEN Beta Version 1.0 or use private vendor software that meets updated CMS data submission specifications www.hcfa.gov/medicare/irfpai-draftspecs.htm

• All IRFs must submit Medicare patient assessment data starting January 1, 2002, regardless of PPS start date – new admits and existing caseload

Patient assessment

• Employee or or contracted employee of IRF, trained in completion of the PAI

• More than one clinician may be involved

• Patients must be informed of rights in advance, if refusal…clinician may obtain information from other sources and has discretion to document source of information (a good idea)

New terminology for admissions and discharges…

• Observation period

• Assessment reference date (ARD) – last day of observation period

• Completion date

• Encoded date - entered into software

• Locked date – successfully passed CMS system edits

• Transmission date – sent to CMS

Billing – unchanged requirements under PPS

• Provider classification

• Bill types

• Ancillary services

• Leave of absences

• Adjustments (changes to HIPPS codes allowed with verifiable info.)

• Timeliness standards

• FI/CWF processing

Billing – new rules

• Claim length – one claim for entire stay, including interrupted stays – 60 day interim bill allowed

• Type of bill

• Revenue code 0024 – IRF PPS indicator

• HIPPS codes – combination of CMG (95 groups) and comorbidity code

• New patient status codes

Patients under care when IRF transitions to PPS

• Perform assessment based on patient characteristics at admission

• Claims allowed to cross over the date of the transition because payment is based on the discharge date

• No special coding required on a crossover claim

Short stays and deaths handled by the “pricer”

• Short stays less than 3 days – handled automatically at FI by pricer

• Deaths (patient status code 20) placed automatically by pricer into one of 5 groups based on length of stay and RIC

Option to bypass blending of TEFRA and PPS rates

Written notice must be received by FI no later than 30 days prior to start of cost report period

Facility must estimate case mix index for next year in order to complete calculation

Compare estimated PPS to TEFRA