Prospective payment system for rehab enters new stage of development

Staff-time studies to begin in February

The first few months of this year should provide some long-awaited answers for rehabilitation providers about the prospective payment system (PPS) for Medicare patients scheduled to go into effect Oct. 1, 2000. In the most recent developments:

• The team chosen by the Health Care Financing Administration (HCFA) to develop the classification system for patients in rehabilitation hospitals and units will present the final version of its work plan, sampling frame, and data collection procedures for the research study this month. The team is from Aspen Systems in Rockville, MD, and Muse & Associates in Washington, DC.

• The Research and Training Institute at Hebrew Rehabilitation Center for the Aged in Roslindale, MA, is expected to submit its final report to HCFA by Feb. 1 on the Minimum Data Set-Post Acute Care (MDS-PAC), the assessment instrument to be used in the PPS. At press time, field testing on the MDS-PAC was scheduled to be completed in late 1998. (For details on the Hebrew Rehabilitation Center for the Aged research, see Rehab Continuum Report, August 1998, p. 101.)

• From February through June, the Aspen Systems/Muse & Associates research team will be conducting staff-time studies at a sampling of rehabilitation hospitals and units. Using the MDS-PAC assessment instrument, the researchers will determine a patient classification system based on resource allocation. (For details on the research process, see story on p. 3.)

• By late 1998 or early 1999, HCFA is expected to appoint a Technical Experts Panel made up of clinicians and representatives of provider organizations and the research community.

The panel will be asked to give feedback at each step of the development of the patient classification system. Its initial meeting is to be held Jan. 11.

The American Medical Rehabilitation Providers Association has had a series of meetings with HCFA officials to give input into the development of patient classifications and case weights.

Because Medicare accounts for 70% of admissions to rehab units and hospitals, a flawed PPS could have dire consequences for patients and providers, says Kenneth Aitchison, president and chief executive officer of Kessler Rehab Corp. in West Orange, NJ. Aitchison is chairman of the PPS task force for the American Medical Rehabilitation Providers Association.

Balanced Budget Act requirements

The Balanced Budget Act of 1997 requires that a PPS based on case mix be phased in for inpatient rehabilitation hospitals and units beginning Oct. 1, 2000. The budget act mandates that the case mix system be fully implemented by Oct. 1, 2002. Payments are to be adjusted for hospital case mix using patient classification groups, area wages, inflation, and outlier and special payments.

Thomas Hoyer, director of the chronic care purchasing policy group at the Center for Health Plans and Providers of HCFA, has stated that his objective is to develop an integrated payment approach for payment of rehabilitation services across all settings in the post-acute continuum, including rehab hospitals, long-term care hospitals, skilled nursing facilities, and home health agencies.

Although there still are a lot of decisions to be made about the rehab PPS, providers can draw a sigh of relief now that HCFA officials have confirmed that the agency does not intend to use the same Minimum Data Set-Resource Utilization Group (MDS-RUGS) used in skilled nursing facilities as a resource allocation tool for a rehab PPS.

Providers had feared that the MDS-RUGS being used as the patient classification system in skilled nursing facilities would not accurately reflect the needs and resource consumption of rehabilitation patients.

MDS-PAC tested

"A lot of people think that because they hear that it is going to be a RUGS-like system, the plan is to adapt the PPS that is in place for skilled nursing facilities. That is not true," says Robert E. Burke, PhD, vice president at Washington, DC-based Muse & Associates and principal investigator for the HCFA’s patient classification system project.

The MDS-PAC is designed to measure resource allocation among post-acute patients with short length of stay but who consume high amount of resources, Burke says.

The current draft of the MDS-PAC being tested by Hebrew Rehabilitation Center for the Aged contains about 300 items and incorporates the essence of the Functional Independence Measure (FIM) developed by the Uniform Data System for Medical Rehabilitation in Buffalo, NY, sources say. The draft has not been released to the public.

Meanwhile, the American Medical Rehabili tation Providers Association has urged HCFA to make sure that the case weights are as accurate as possible, says Carolyn Zollar, JD, general counsel for the Washington, DC-based association.

"If the case weights are not as accurate as possible, it could lead to incentives that we are afraid would deny access to care, particularly for the highly acute disabled Medicare beneficiary," Zollar says.

Concerns from rehab association

Members of the American Medical Rehabilitation Providers Association are concerned that current plans call for developing classifications based on a small sample of patients, and that the staff-time studies will not measure the cost of non-therapy ancillary services such as drugs and medical supplies, Aitchison says.

He estimates that non-therapy ancillaries account for about 43% of all ancillary costs.

"There are great variations in cost of ancillary services among rehab patients. For example, a stroke patient with complications will require more medications than a post-op hip case without complications," Aitchison adds.

The task force has proposed that HCFA incorporate the research done by the Santa Monica, CA-based Rand Corp. in earlier work on a PPS for rehabilitation using the Functional Independence Measure-Function Related Groups (FIM-FRGs.) HCFA officials decided not to base its reimbursement system on the FIM-FRGs because skilled nursing homes use a RUGS-based reimbursement system, and the goal is to have a single assessment system across venues.

In a letter to Hoyer, Aitchison urged HCFA to combine the staff-time work by the Aspen/Muse team on a limited number of patients with the Rand research and data on about 180,000 Medicare patients from 533 rehabilitation hospitals and units delivered to HCFA by the Uniform Data System for Medical Rehabilitation.

"We believe this approach would produce an accurate system of case classification, weights, and payments that would serve the interest of patients, providers, and the Medicare Trust Fund. Because of the limited number of cases to be assessed, the RUG-III approach is very unlikely to do so," Aitchison says.


For more information on the prospective payment system for rehab, contact:

The American Medical Rehabilitation Providers Association, 1606 20th St. NW, Third Floor, Washington, DC 20009. Telephone (888) 346-4624. Fax: (202) 833-9168. Recorded news line: (888) 802-5712. Fax-on-Demand line: (888) 632-8023. E-mail: World Wide Web:

Robert E. Burke, PhD, Vice President, Muse & Associates, 919 18th St. NW, Suite 10001, Washington, DC 20006. Fax: (202) 496-0201. E-mail: