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Will rehab follow home health, SNF, hospital?
If rehab facility administrators seem a little edgy these days, it’s quite understandable. The industry will enter the new year anxious about what may become a cataclysmic change in how Medicare reimburses for inpatient rehab services.
Rehab providers have been in the unfortunate position of watching a hurricane sweep through home health and skilled nursing facilities, all the time knowing the same "Big One," called the prospective payment system (PPS), was heading their way next.
In the home health arena, 20% of the agencies were forced to close in the past two years, and that was merely the result of the reimbursement changes under the interim payment system, says Pauline Degenfelder, PhD, MBA, FACHE, vice president of The MetroHealth System in Cleve land. The MetroHealth System provides a variety of post-acute services, including intermediate care, subacute skilled nursing, home health, adult day care programs, and rehabilitation.
The home health proposed rules on PPS were published in late October 1999, and home health industry experts have said they likely will result in more home care agencies closing their doors. One saving grace for the rehab industry might be that it never went through the rapid growth and expansion that characterized home health in the first half of the 1990s, she says. Like a coastline with too many wood-frame vacation homes, the home health industry was extremely vulnerable to the destructive forces of the Balanced Budget Act of 1997. "The rehab industry has had a more moderate type of growth," Degenfelder adds.
The rehab industry has supported legislation aimed at requiring the payment unit to be per discharge, says Carolyn Zollar, JD, vice president of government relations and policy development for the American Medical Rehabilitation Providers Association (AMRPA) in Washington, DC.
At press time for this issue of Rehab Continuum Report, it appeared that Congress would pass and the president would sign the Medicare relief bill, which would specify a per-discharge payment unit for inpatient rehab PPS. The act also would put a two-year moratorium on the annual caps for rehabilitation therapy. The caps, which went into effect this year, were a combined $1,500 for physical and speech therapy and a separate $1,500 for occupational therapy.
"We’re very happy to see the moratorium placed on the rehab therapy cap," Zollar says.
Although the inpatient rehabilitation PPS proposed rule had not yet been released when RCR went to press, rehab experts point to several possible changes under PPS that could result in major changes to the industry. Those include the following:
• Transition period. The Baltimore-based Health Care Financing Administration (HCFA) is required by law to provide a two-year transition period, from 2001 to 2002. In the first year, rehab facilities will receive two-thirds of their TEFRA payment and one-third of their payment under the PPS. AMRPA chairman Ken Aitchison addressed this issue in an Aug. 26, 1999, letter to Robert Kuhl of HCFA’s Chronic Care Purchasing Policy Group of the Center for Health Plans and Providers.
Recommendations from the chairman
Aitchison wrote, "We wish to assure that the TEFRA payments as calculated fully account for all inpatient operating costs, pass-through payments, adjustment payments, and incentive payments, plus any cost sharing and annual updates."
Aitchison also recommended that HCFA retain periodic interim payments until PPS is fully implemented because a rehab facility’s cash flow could be disrupted if the facility has to wait until a case is discharged for payment. That would be particularly difficult in cases such as head injury and spinal cord injury, for which the average length of stay is considerably more than two weeks.
• PPS payment rates. HCFA is expected to propose an annual update under PPS beginning in the fiscal year 2001. The increase factor is expected to be based on what is considered the appropriate percentage increase for a market basket of goods and services that receive Medicare rehab services payments. AMRPA recommends HCFA use the hospital wage index in determining the labor-related share of the rates to be adjusted for local wages.
• Criteria for exclusions. This section is particularly troublesome to the rehab industry. The criteria include a requirement that 75% of inpatients receive intensive rehabilitation services for these 10 conditions: stroke, arthritis, burns, amputation, spinal cord injury, fracture of femur, major multiple trauma, congenital deformity, head injury, and other neurologic conditions.
The rule is so strict that if a rehabilitation facility has more than 25% of its services in areas that are outside the list of 10, then the facility will lose its Medicare exclusion from the diagnosis related groups (DRGs) and will be paid under the DRGs, explains Bill Munley, MHSA, CRA, administrator of rehab/neuro/ortho services at St. Francis Hospital in Greenville, SC.
"And the 75% applies to all patients, not just Medicare patients," Munley adds. "When you’re a designated specific inpatient rehab center, all patients have to conform to HCFA guidelines, and you can’t, for example, put a Blue Cross patient with appendicitis on your unit because all patients have to meet Medicare criteria."
The problem is that the list is based on conditions that rehabilitation hospitals treated in the late 1970s and does not reflect all the changes in medical rehabilitation in the two decades since, wrote Aitchison. "We recommend that these criteria be revisited and changed. We recommend that it be revised to reflect the conditions included in the rehabilitation impairment categories (RICs) as outlined in the 1997 RAND report."
For example, HCFA should add the categories of chronic pain, cardiac, and pulmonary rehabilitation, Aitchison wrote.
Munley agrees those three categories, plus oncology rehabilitation, should be added to the list. "Our hospital has branched out into those four categories, and we take in patients who are debilitated and need rehabilitation," he says.
Without changes to the criteria list, rehab facilities that are not associated with trauma centers are at a significant disadvantage because they cannot receive referrals for spinal cord injuries, major trauma, or head injury, Munley notes. "And since congenital deformities are so rare, that means five out of the 10 categories we don’t receive at St. Francis. That’s why we’re so dependent on orthopedic and stroke patients."
• Research burden. Collecting information under the MDS-PAC system, as HCFA officials have said is planned, will impose a research burden on rehab facilities, AMRPA officials say.
"Organizations that have participated in the MDS-PAC field studies are concerned about the size and time it takes to collect data," wrote Aitchison and Allen W. Heinemann, PhD, ABPP, chairman of the AMRPA PPS Task Force Work Group on MDS-PAC in an Oct. 13, 1999, letter to HCFA. "This assessment tool has become a very large and comprehensive instrument," they wrote. "However, its detailed nature imposes a large administrative burden on facilities."
The tool is expected to be costly to implement and will require considerable staff time and training. Rehab providers who have participated in field tests of MDS-PAC say completing the tool requires at least 60 minutes. Multiply that by the at least three times the tool is administered during a patient’s stay, and that means completion will take three hours per case.
Aitchison and Heinemann also noted that most facilities would have to hire at least one extra employee to handle using the MDS-PAC, which would cost the rehab industry about $41 million.
• Transfer rule. HCFA’s transfer rule for acute care hospitals has cost some hospitals thousands of dollars but hardly posed a financial ripple at others. The rehab industry has some concerns about how severe any transfer rule might be once HCFA imposes it.
The transfer rule, which was implemented for acute hospitals on Oct. 1, 1998, basically establishes a set length of stay for a set of DRGs. If a patient is discharged from acute care and sent to a post-acute facility, including rehab services, after a shorter length of stay than HCFA has established, the acute care hospital will lose a significant portion of its reimbursement.
HCFA devised this rule to prevent hospitals from shifting patients to a less costly setting after a brief length of stay and then collecting the full acute care payment for a particular DRG. "Back when HCFA implemented DRGs in 1983, it made people more efficient and patients get out sooner, cutting costs by moving patients to a different level of care, such as skilled nursing or home health, which all have their own reimbursement system," Munley explains.
"The government’s reasoning was that people were getting out too soon, and patients were not getting the time they needed, and they weren’t sure outcomes would be the same," he adds.
The problem is that this transfer rule had a potential negative financial impact on hospitals that already had become very efficient in reducing the length of stay. St. Francis Hospital in Green-ville, for instance, had estimated the change would cost $235,000 in its first year, Munley says, adding that the loss actually was less than that.
However, the other impact from the transfer rule is on referrals to rehab facilities. Some hospitals will refer patients later in their recovery process under the transfer rule, he notes. "We wouldn’t do that at St. Francis, but we’ve noticed that referrals from outside facilities are coming to us later from the patient’s onset of injury. It’s not a big difference, but we’ve noticed it."
Other hospitals have noticed no impact from the acute care transfer rule. "Our DRG lengths of stay worked out to the point where we didn’t have to adjust anything or change our discharge patterns at all to come into compliance for transfer rules," says Chris Ensmann, MS, administrator/director of rehabilitation services for North Mississippi Medical Center in Tupelo, MS. The large rural hospital has 650 beds, with a 30-bed rehab facility, and it serves 22 counties in northeastern Mississippi, northwestern Alabama, and southern Tennessee.
Pauline Degenfelder, PhD, MBA, FACHE, Vice President, The MetroHealth System, 2500 MetroHealth Drive, Cleveland, OH 44109-1998. Phone: (216) 778-5020.
Chris Ensmann, MS, Administrator/Director, Rehabilitation Services, North Mississippi Medical Center, 830 S. Gloster, Tupelo, MS 38801. Phone: (662) 841-4054.
Bill Munley, MHSA, CRA, Administrator, Rehab/ Neuro/Ortho Services, St. Francis Hospital, One St. Francis Drive, Greenville, SC 29601. Phone: (864) 255-1871.
Carolyn Zollar, JD, Vice President, Government Relations and Policy Development, American Medical Rehabilitation Providers Association, 1606 20th St. N.W., 3rd Floor, Washington, DC 20009. Phone: (888) 346-4624.