CMS Proposes More Accurate Payments For Inpatient Rehabilitation Services In FY 2009

Main Category: Medicare / Medicaid / SCHIP
Article Date: 22 Apr 2008 - 3:00 PDT

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The Centers for Medicare & Medicaid Services (CMS) proposed a rule that will improve the accuracy of payment for services furnished to people with Medicare who need the intensive rehabilitation services provided by Inpatient Rehabilitation Facilities (IRFs). These include patients who are recovering from serious illnesses or injuries, such as stroke, spinal cord injuries, severe burns, amputations and a number of other conditions. There are currently more than 1,200 facilities that are paid as IRFs.

"CMS is committed to ensuring that people with Medicare who need intensive rehabilitation services to maximize their recovery from an illness or accident have access to quality care in an inpatient rehabilitation setting and that Medicare pays rehabilitation hospitals appropriately for that care," said CMS Acting Administrator Kerry Weems. "The proposals we are announcing today will help to ensure that these services continue to be available to those who need them, while helping to preserve the Medicare Hospital Trust Fund for future generations."

Due to statutory requirements in the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA), CMS will apply a zero percent increase factor for IRF payment rates for FY 2009. As a result, CMS expects to spend roughly $5.6 billion in FY 2009 and approximately $30 billion in the next five years for IRF services.

The proposals CMS is announcing today will improve the accuracy of Medicare payments for these services by recalculating the rates using more recent information from rehabilitation hospitals about the costs they have incurred in treating patients. By improving the accuracy of payments for these services, CMS is moving closer to meeting its goal of transforming Medicare to a prudent purchaser of quality health care services.

At the same time, the proposed rule would implement provisions in the Medicare, Medicaid and SCHIP Extension Act. The proposal accomplishes this by implementing policies for FY 2009 that CMS had previously adopted on a temporary basis. These include requiring that 60 percent of a facility's patient population have one of 13 specified qualifying conditions and allowing facilities to count patients whose principal reason for needing inpatient rehabilitation services is not one of the specified conditions, but whose treatment is complicated by the presence of one of the 13 conditions as a secondary diagnosis.

IRFs are paid at higher rates for rehabilitation therapy services than would be paid in other settings, such as hospital outpatient departments, skilled nursing facilities, or in the home health setting. The higher rates are due to the fact that these patients need more intensive and coordinated rehabilitation therapy services because they have more severe and more complex medical conditions.

Since 2002, Medicare has paid rehabilitation hospitals and rehabilitation units in acute care hospitals for inpatient stays under the IRF prospective payment system. Medicare makes a single payment to the IRF, which is based on the average costs for treating a patient, taking into account as well the patient's overall physical and mental abilities. In rare cases, where the costs of treating an individual patient are much higher than average, Medicare will make an additional payment to the facility.

"CMS has worked hard to make sure that the patients treated in inpatient rehabilitation settings are able to make good use of the intensive services provided, and that our payment rates are tailored to meet the higher costs of treating these patients," said Weems.

CMS will accept comments from the public on the proposed rule until June 20, 2008, and will respond to the comments in a final rule to be published on or before August 1, 2008.

For more information, see here.

Centers for Medicare & Medicaid Services