PPS for Rehabilitation Implementation Issues November 2001

1. Washington Report… PPS for Rehabilitation Implementation Issues November 2001 Brian Ellsworth Senior Associate Director American Hospital Association

2. 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

3. 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

4. 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

5. 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

6. 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)

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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)

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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