Mark Callan, Vice President Kelly Price, Principal Analyst October 2001

1. The Healthcare Association of New York StateInpatient Rehabilitation Facility Prospective Payment System IRF PPS Mark Callan, Vice President Kelly Price, Principal Analyst October 2001

2. Background • Inpatient rehabilitation units/hospitals excluded from inpatient PPS - 1983 • BBA, BBRA and BIPA -legislated IRF PPS • November 3, 2000 – Proposed rule published in Federal Register • Comments to CMS on scope of PPS, patient assessment tool, and use of modifiers to adequately address costs of care • April 20, 2001 – CMS revised instrument • August 7, 2001 – Final Rule published

3. New Language • CMS- Centers for Medicare and Medicaid Services ( formerly HCFA) • PAI – Patient Assessment Instrument • RIC – Rehabilitation Impairment Category • CMG – Case Mix Group • FIM – Functional Independence Measure • ADL – Activities of Daily Living

4. Patient Assessment Instrument (PAI) • Completed only on Medicare Part A patients • 3 page form-both payment and research items • Uses modified version of Functional Independence Measure (FIMTM) from UDSmr • Completed as a routine on admission and discharge* • ARD- Sets Assessment reference date • CMG – generated by form completion • Some assessments are required by CMS under special circumstances

5. Anatomy of a CMG Impairment Group Code Comorbidities FIM Scores Age CMG

6. IRF PPS Data Transmission • Assuring minimum available hardware requirements 133 MHZ or faster -Pentium compatible CPU w/ CD-ROM; 32 megs RAM; Web browser w/ 128 bit SSL encryption ( e.g. Navigator 4.08) • Establish secure data entry account • Software for routine data entry • Coordination with billing • Maintain integrity of systems and records

7. Reimbursement

8. Includes: Operating Costs Capital Costs Not Included: DME Bad Debts Scope

9. Phase-In • Cost Reports beginning between January 1, 2002 and September 30, 2002 - payment = 1/3 TEFRA + 2/3 PPS OR 100% PPS Election must be received 30 days before start of CRP For Jan. 1 hospitals = December 1, 2001 • Cost Reports beginning on or after October 1, 2002 - payment = 100% PPS

10. National Rate = $11,838 • FFY 1996, 1997, & 1998 cost report data • CY 1998 & 1999 Medicare claims with available FIM data • Payment data for 1,024 facilities • FIM and claim data for ~74% of MEDPAR rehab cases • 1.16% permanently carved out for Behavioral adjustment • 3% carved out & reserved for payment of cost Outliers • 5% carve out would reduce National rate to ~ $11,594 • Adjusted for case and facility level factors

11. Case Mix Groups • Defined by • major impairment group (RIC) - admission • Motor score, cognitive score, age - admission • Comorbidities - discharge • 95 CMGs, further divided by comorbidities into 4 payment tiers • 5 Special CMGs for short stays and expired cases • Total of 385 unique payment rates • Complete grouping rules for PAI Instrument not explicitly listed anywhere but can be inferred from IRVEN software

12. Case Level AdjustmentsFlow Chart • Interrupted stay • Early Transfers • Short Stay • Expired • Cost Outliers

14. Interrupted Stay • patient is discharged & returns by midnight of Day 3 (day of discharge = Day 1) • Ignore initial discharge assessment • Continue with same assessment instrument • Paid as a single discharge • LOS is reduced by the interruption

17. Early Transfer Cases • Length of Stay < ALOS for CMG • Discharged to • Another rehabilitation facility • A long-term care hospital • An inpatient hospital • A nursing home • Paid a per-diem based on CMG payment plus ½ day for up-front costs

20. Short Stay – CMG 5001 • Length of Stay <= 3 days • Payment = $1,954.45 plus facility adjustments

23. Expired Cases

27. Facility Level Adjustments • Wage Index • Low Income Patient percentage • Rural location

28. Wage Index No rural floor, no reclassifications

29. Low-Income Patient Adjustment • rehab specific SSI % • rehab specific Medicaid % • LIP = (1+SSI % + Medicaid%)^.4838 • (1+.04+.16)^.4838=1.0922 • average adjustment more rational • 5% of $11,838 - final • 90% of $6,024 - proposed

30. Rural Facility Adjustment • Applies to any facility in a non-MSA • Payment = (CMI, Wage, and LIP adjusted payment)* 1.1914

31. Cost Outlier • Paid 80% of (Costs – Threshold) • Costs = Charges * RCC • Threshold = ((CMG payment + $11,211)*facility adjustments)

32. Payment Example – StandardCMG 1005 with a Tier 1 Comorbidity Case-Mix Index1.7588 CMI adjusted Rate $11,838 x 1.7588 = $20,821 Wage Index (WI) 0.8472 Labor Portion of CMI Adjusted Rate $20,821 x .72395 = $15,073 WI adj. Labor Portion $15,073 x 0.8472 = $12,770 WI Adjstd Labor + Non-Labor Portion $12,770 + (0.27605 x $20,821) = $18,518 LIP Adjustment 1.0922 x $18,518 = $20,225 Rural Adjustment 1.1914 x $20,225 = $24,096

33. Payment Example – OutlierCMG 1005 with a Tier 1 Comorbidity Fixed Loss Amount$11,211 Wage Index (WI) 0.8472 WI Adjusted Fixed Loss Amount $9,971 LIP Adjustment 1.0922 x $9,971 = $10,890 Rural Adjustment 1.1914 x $10,890 = $12,975 Outlier Threshold $12,975 +$24,096 = $37,070 Cost for Case $50,000 Outlier Payment 80% * ($50,000 - $37,070) = $10,344

34. Payment Example – Transfer CMG 1005 with a Tier 1 Comorbidity Discharge Destination Code 05 = Skilled Nursing Facility Average Length of stay for CMG 1005 21 Actual Length of Stay 7 Fully adjusted CMG Rate $24,096 Average Daily Payment $1,147 Actual Length of Stay plus ½ day 7.5 Transfer Case Payment $8,606

35. CMS Impact EstimatesFull Implementation • Nation +0% • Freestanding -4% • Hospital Units +2% • Teaching • Resident to ADC<10% +0% • Resident to ADC 10%=19% -3% • Resident to ADC>19% -2% • Non-Teaching +0%

36. Billing Information • CMS Program Memorandum A-01-110 (9/14/01) provides specific billing instructions (can download from CMS site). • Items that must be entered on the bill include: Revenue Code 0024 5 digit HIPPS Rate/CMG Code. • Patient Status will have 2 new codes added to the list of possible status codes: 62 Discharged to another rehab facility 63 Discharged to a long-term care hospital

37. HANYS Grouper/Pricer Model • Facility specific TEFRA payments vs. PPS • Facility must review TEFRA calculations • Facility must enter individual cases to estimate PPS payments • Data Edits and Information with Data Entry

38. Ways to Use it • Impact Estimate • Calculate payments for unusual cases • Calculate payments for groups of cases • Education and Training

39. UDSmr Instrument Availability of historic info Not an exact grouping Primary use is to determine whether to elect 100% PPS payment IRF PAI Precise grouping Training tool Includes FIM Modifiers Primary use is to calculate actual PPS payment. PPS Payment estimate

40. Case Data Entry • Need UDSmr assessment • Be precise in entering codes for impairment categories and comorbidities • Print out RIC and Comorbidity appendices • Review results and decide if this is a typical case • If Yes, then Log and Clear • Enter next case

41. Impact Analysis • Comparison of Payments PPS vs. TEFRA • Comparison of Payments vs. Historic Cost • Per-discharge & Per-Day • Check Average Lengths of Stay • – is your sample representative?

42. Contact Information • If you encounter a problem while running the grouper/pricer or have any other concerns or comments, please contact either: Kelly Price (Kprice@hanys.org) (518) 431-7729 or Lee Santos (Lsantos@hanys.org) (518) 431-7708