Medicare Compliance & Reimbursement

Can a market-basket boost offset the 75-percent rule bust?

Inpatient rehab hospitals are looking forward to an increase in payments slated to take effect Oct. 1 under the updated prospective payment system rates for 2005. But the 75-percent rule looms like an 800-pound gorilla threatening to crush that gain-here's what rehab providers need to know to respond.

Good news: IRFs will see a 3.1-percent boost in reimbursement for fiscal year 2005, which is "a pretty good uptick," according to consultant Fran Fowler with Fowler Healthcare Affiliates Inc. in Atlanta. The Centers for Medicare & Medicaid Services bases PPS payment rates on case-mix groups reflecting patients' clinical characteristics, plus the resources the patient's treatment will require.

"Any percentage increase in the market basket is great," agrees attorney Jeff Micklos with Foley & Lardner in Washington, DC. Providers most likely are reaping election-year benefits with increases like this one, he speculates.

Rural facilities, which constitute approximately 10 percent of Medicare-certified inpatient rehab facilities, can expect an even bigger reimbursement boost on Oct. 1. These facilities will see a 19-percent adjustment to their payment rates "to offset the higher costs they incur because they have fewer cases, longer lengths of stay, and higher average costs per case," CMS announces.

This adjustment comes as a huge boon for Genesis Healthcare System in Zanesville, OH, reports Genesis' rehab development manager Karen Eyberger. "We have indeed seen an increase in our costs to provide rehabilitation care thus far in 2004, so the adjustment is very welcome, and I praise CMS for recognizing the unique challenges" rural facilities face, she tells Eli.

Bad news: The increases CMS has extended for fiscal year 2005 will help cover some of providers' increased costs-but it won't be enough to offset the damage the 75-percent rule threatens to inflict. "It's a drop in the bucket compared to what they're taking out," Fowler laments. In fact, CMS is "making a hoopla" over the increase to assuage complaints about what it's taking away with the 75 percent rule, she charges.

Take action: There are a few things you can do to make the most of this PPS update, experts note.

First, providers should maximize the increase in payments by minimizing increases in their costs. "We are in the process of pulling together a team to analyze the specific 'whys' regarding our costs increase," Eyberger reports. The team will include Eyberger, the inpatient rehab manager, the rehab nurse manager, pertinent therapists, the admission nurses, the rehab director and the medical director, she says.

Once providers know why their costs have increased, they can then determine ways to control or reduce costs. "Controlling our costs as effectively as possible-especially when combined with the upcoming reimbursement adjustments-should be a win-win situation for our facility," Eyberger [...]