Inpatient rehabilitation facilities (IRFs) are projected to receive an increase in Medicare payments in fiscal year (FY) 2007 of $40 million based on a market basket update, the implementation of certain provisions of the Deficit Reduction Act of 2005 (DRA) (PubLNo 109-171) affecting IRFs, adjustments for coding changes, and changes to outlier threshold, according to the IRF prospective payment system (PPS) Proposed rule. The new payments and policies would apply to discharges on or after October 1, 2006, through September 30, 2007.
Payment updates. The proposed changes for FY 2007 include a market basket increase of 3.4 percent based on rehabilitation, psychiatric, and long-term care (RPL) market basket. The Proposed rule would also increase the outlier threshold for high cost outlier cases from $5,129 to $5,609. At this level, CMS projects that estimated outlier payments would equal 3 percent of total estimated payments under the IRF PPS.
The proposed changes for FY 2007 include a reduction of 2.9 percent in the standard payment amount. This is in addition to the 1.9 percent reduction implemented in FY 2006. The 2002 implementation of the new IRF PPS created incentives for coding patients at higher acuity levels rather than actual changes in patient acuity. An analysis found that upcoding in the first year of the IRF PPS increased payments to providers by at least 1.9 percent, and as much as 5.8 percent.
Compliance threshold. The Proposed rule would implement certain provisions in the DRA affecting IRFs by amending the existing regulations regarding the three-year phase-in of a 75 percent compliance threshold – a requirement that when fully phased-in requires at least 75 percent of an IRF's patient population to have one of the 13 designated medical conditions, as well as need intensive inpatient rehabilitation services. For providers with cost reporting periods that start on or after July 1, 2006, and before July 1, 2007, the compliance threshold will be 60 percent. For providers with cost reporting periods starting on or after July 1, 2007, and before July 1, 2008, the compliance threshold will be 65 percent, while the 75 percent threshold will be imposed for providers with cost reporting periods beginning on or after July 1, 2008. In addition, comorbidities that meet the criteria as specified in the regulations may continue to be used to determine the compliance percentage for cost reporting periods that begin before July 1, 2008.
The proposed IRF PPS rule will appear in the May 15, 2006
SOURCE: CMS Release, May 8, 2006.
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