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

Main Category: Medicare / Medicaid / SCHIP
Article Date: 01 Aug 2008 - 4:00 PDT

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The Centers for Medicare & Medicaid Services (CMS) issued a final rule to 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 projects that Medicare payments to IRFs under this final rule will be approximately $5.6 billion in FY 2009.

"The payment rates and policies adopted in this final rule will make it possible for beneficiaries who are severely impaired by illness or injury, but who are able to participate in an intensive program of rehabilitation, to obtain high quality care in an inpatient setting," said CMS Acting Administrator Kerry Weems.

Since 2002, Medicare has paid rehabilitation hospitals and rehabilitation units in acute care hospitals for inpatient stays under the IRF prospective payment system (PPS). Under this system, patients are classified into case-mix groups (CMGs) taking into account the patient's overall physical and cognitive status. Medicare establishes a weight for each CMG based on the average resources required for treating a patient in that CMG. Medicare makes a single payment to the IRF based on a base rate, which is determined by multiplying the weight for the CMG by a standard federal rate which is updated annually for inflation. The base rate is further adjusted to account for specific characteristics and location of the facility. 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.

The payment rates set by the IRF PPS for rehabilitation therapy services are higher than would be paid for services in other settings, such as hospital outpatient departments, skilled nursing facilities, or in the home health setting. This is because these patients have more severe and more complex medical conditions that need more intensive and coordinated rehabilitation services.

As part of its ongoing effort to transform Medicare into a prudent purchaser of quality health care services and improve the accuracy of its payment systems, CMS has recalculated the weights assigned to the CMGs using more recent data from rehabilitation hospitals about the types of patients they are treating and the resources required. However, as required by the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA), the final rule sets the inflation update for the standard federal rate at zero percent for FY 2009.

As required by the MMSEA, the final rule retains the requirement that at least 60 percent of a facility's patient population have one of 13 qualifying conditions specified in Medicare regulations. At the same time, the final rule implements provisions in the MMSEA that allow facilities to continue to count patients whose principal reason for needing inpatient rehabilitation services is not one of the qualifying conditions, but whose treatment is complicated by the presence of one or more of these conditions as a secondary diagnosis.

"The rule CMS is adopting today will help to ensure that people with Medicare have access to rehabilitation services that are appropriate to their medical conditions, and that will help them reach their maximum level of recovery as quickly as possible," said Weems.

The final rule will appear in the August 8 Federal Register, and will be effective for discharges in FY 2009, beginning October 1, 2008. For more information, see here.

Centers for Medicare & Medicaid Services

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