Rehabilitation reimbursement changes afoot; hard to say what might happen
Providers who survive the change must stay informed
Rehab providers should keep up with what’s going on in Washington to survive in what has become a rapidly changing reimbursement arena. Consider the following recent events that can affect your bottom line:
• The Health Care Financing Administration’s (HCFA) choice of a prospective payment system (PPS) for rehabilitation remains in the air as the clock ticks toward the October 2000 deadline for implementation.
Some rehab insiders tell Rehab Continuum Report that HCFA could mandate the Resource Utilization Groups System (RUGS) as a reimbursement system instead of the Functional Independence Measure-Functional Related Groups (FIM-FRG). HCFA was unable to completely resolve a dispute with the Uniform Data System for Medical Rehabil-itation (UDSMR), which owns the rights to part of the system. HCFA could simply throw out the UDS system and opt for something with no strings attached, some experts say.
• Some 300 rehab providers can benefit from a provision in the Balanced Budget Act of 1997 that allows them to increase Medicare reimbursement under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) but time is running out to apply.
• The Balanced Budget Act of 1997 all but eliminates the incentive payments to rehab providers who keep their costs under their TEFRA reimbursement limits.
While no one will lose money under this provision, it likely will have a dramatic effect on facilities that depend on incentive payments to boost profits. (For details on changes in TEFRA reimbursement, see story, p. 163.)
HCFA’s choice of a PPS system for rehab, as mandated by the Balanced Budget Act of 1997, is likely to have the most far-reaching effect on you.
Until fairly recently, most rehab providers were sure the FIM-FRG system would be adopted by HCFA as the basis of a PPS system for rehab. However, the dispute between HCFA and the Buffalo-NY based UDSMR, which claims exclusive rights to some portions FIM-FRG, has led some to believe that HCFA will instead mandate a switch to RUGS, giving them a single reimbursement system for post-acute providers.
Rehab providers who now use the FIM and subscribe to the UDSMR will have to use a modified version of the Minimum Data Set (MDS) to collect data on their Medicare patients if HCFA chooses RUGS as the basis for a rehab PPS.
The current version of the MDS, which is geared toward long-term care patients, tracks data on patient conditions such as dementia and cataracts that would not be applicable to most rehab patients. Because the MDS does not provide outcome data in its present version, providers may need to continue using the FIM to provide data for managed care while using the MDS for Medicare patients.
In 1995, HCFA awarded a contract to the RAND Corp., based in Santa Monica, CA, to evaluate the use of FRGs as a basis for reimbursement and to come up with a PPS based on them. The RAND report was expected at the end of 1996. HCFA received the report in June 1997 but withheld its release because of a dispute with the UDSMR.
HCFA released portions of the RAND report in October, but because of objections from the UDSMR it has not released information on the patient classification groups, which prevents rehabilitation providers from determining how they would fare under a PPS system based on the FIM-FRGs.
Several HCFA officials have made public statements that they prefer to use some portion of RUGS as the basis of payment for medical rehabilitation. RUGS, which uses the MDS for data collection, will be implemented as a PPS for skilled nursing facilities beginning July 1, 1998.
Mandating a PPS for rehab based on RUGS gives HCFA the advantage of administering only one reimbursement system for post-acute care in addition to rendering the dispute with the UDSMR moot.
Since HCFA oversees far more patients in skilled nursing facilities than in inpatient rehab facilities, some feel it may make sense to modify RUGS to cover the additional needs for rehab patients rather than to deal with a completely different payment system for rehab. HCFA has not set a date for a decision on which PPS system to implement, says Bill Buczko, research analyst at HCFA’s office of strategic planning.
ARA task force
In the meantime, the American Rehabilitation Association (ARA) has put together a prospective payment task force to analyze the RAND report, the MDS, RUGS, and other alternatives to come up with a PPS for rehabilitation patients. The group, which includes rehab administrators, financial experts, and researchers, is expected to meet before the end of the year.
"The field has a responsibility to sit down and analyze what HCFA proposes to do and to come forward to policy-makers regarding what should be a good PPS for rehab. That is going to be no small challenge," explains Carolyn Zollar, JD, general counsel for the Reston, VA-based ARA.
If HCFA announces the choices of the RUGS system as a PPS for rehab as some experts predict, rehab providers shouldn’t despair. RUGS is unlikely to cut your HCFA payments, and in some cases it could increase them, at least for the short term.
"As currently envisioned, the RUGS system would reimburse facilities on a per diem basis, not a per discharge/episode basis. It has also been said that this payment system would be budget neutral minus 2% for rehabilitation hospitals and units, suggesting that the per diem rate would be reasonably high initially," observes Sam Fleming, research analyst with Joe W. Fleming II PC, a Washington, DC, law firm specializing in rehabilitation reimbursement issues.
RUGS would effectively take the cap off lengths of stay while potentially paying a per diem rate that could be above or close to cost for providers, Fleming adds. "It could be a lucrative couple of years until HCFA caught up and revised the per diem rates downward to compensate," he adds.
RUGS documents and accounts for patient conditions and treatments and develops a case mix index based on the severity of the patients.
"Under the RUGS system, the question would be the per diem rate. If people are receiving a lot of therapy, the RUGS system would document it and account for it," notes Malcolm Morrison, PhD, president of Morrison Informatics, a health care consulting firm in Mechanicsburg, PA.
The MDS is used to assess patient conditions and provide identification of treatment needed. The RUGS portion of the MDS is used to determine the severity of the case mix, which determines the reimbursement.
[Editor’s note: Additional information about the MDS is available at the following Internet addresses: http:www.hcfa.gov; http:www.dhs.state.tx.us/ proj/mds.html; http:www.alliedtech.co.rch/project1/ index.html. For more information on American Rehab’s TEFRA rebasing project, contact Carolyn Zollar at (703) 716-4063. Sam Fleming may be reached at (202) 872-1033. Malcolm Morrison’s number is (717) 795-8410.]
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