March 2001

Trends and Issues

By Cherilyn G. Murer, JD, CRA

Deciphering the Details

An update on implementing PPS for inpatient rehabilitation

The SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) provides an opportunity for a facility to skip the phase-in and move directly to a fully phased-in prospective payment system (PPS) rate. This legislative change stemmed from the reaction of the skilled nursing facility (SNF) lobby when SNF PPS was implemented. There was no option for SNFs to skip the phase-in, which was not well accepted by some SNFs.

It is important to clarify what types of costs are covered by the PPS for inpatient rehabilitation. The new system encompasses routine, ancillary, and capital costs for inpatient rehabilitation facilities (IRFs) but will not cover educational activities, bad debt, and other costs. One of the goals of implementation is to give each rehabilitation facility an appropriate payment for the efficient delivery of care required by its Medicare patients.

As a payment unit, PPS uses a per discharge methodology. The payment rate for IRFs is based on the average payment per discharge for operating and capital costs, adjusted by an additional increase factor, additional payments for outliers, geographic wage variations, case-mix weighing factors, and all other factors that the Secretary of Health and Human Services deems appropriate.

Calculating The Standard Rate

The standard rate for IRF PPS is calculated using the relative payment weights for case mix groups (CMGs) adjusted by both facility adjustments and case adjustments. The former are adjustments to payments based on the specific costs of a facility due to its special circumstances, mostly with regard to geographic location. Facility adjustments include geographic wage index, disproportionate share, and rural area considerations. Case adjustments relate to each specific patient by bringing items such as transfers, short stays, and outliers into the reimbursement formula. As recently imposed by BIPA, the total payments for IRF PPS must equal the amount of payments that the facilities would have received under the cost-based system for fiscal year 2002.

CMGs are made up of four elements including a patient’s age, functional status (motor and cognitive), comorbidities (additional medical conditions that increase the complexity of care delivered), and rehabilitation impairment categories (RICs). There are 92 CMGs plus one for short stay patients (less than 3 days) and four categories for expired patients.

RICs are groups of codes that indicate the primary cause of the rehabilitation hospitalization. There are 21 RICs: stroke, traumatic brain injury, nontraumatic brain injury, traumatic spinal cord injury, nontraumatic spinal cord injury, neurological, orthopedic fracture of lower extremity, orthopedic replacement of lower extremity, other orthopedic, amputation-lower extremity, amputation-other, osteoarthritis, rheumatoid and other arthritis, cardiac, pulmonary, pain syndrome, major multiple trauma (without brain or spinal cord injury), major multiple trauma (with brain or spinal cord injury), Guillain-Barre syndrome, miscellaneous, and burns.

To determine CMGs, staff must categorize patients in the appropriate RIC based on their reason for admission. After the patient has been assigned to an RIC, their motor and cognitive functional status, comorbidity data, and age determine which CMG is assigned. To efficiently collect and use the appropriate patient data, the PPS-IRF rule proposes the use of a new patient assessment tool.

Patient Assessment Tool

The rule proposes that IRFs will use the Minimum Data Set for Post Acute Care (MDS-PAC) as a patient assessment tool. This tool will allow staff to collect data to categorize the patient in the proper payment category.

The proposal to use a new assessment tool as opposed to the familiar functional independence measure (FIM) tool is meant to facilitate the ability to have a common measurement instrument across different post-acute provider settings. It is anticipated that the MDS-PAC can be such a tool. There is a possibility that through current study results, it will be determined that the MDS-PAC is not the proper tool to use, as it is written, and that modifications may be done to make the tool more in line with the FIM tool.

If used, the rule proposes that the MDS-PAC must be completed for all Medicare patients admitted or discharged on or after the effective date. Facilities would complete an MDS-PAC for each patient at the time of admission; on the 4th day, 11th day, 30th day, and 60th day; and on the date of discharge.

The MDS for post acute care has 12 sections: cognition, communication, behavior and mood, functional status, bowel and bladder continence, diagnoses, medical complexities, oral and nutritional information, pain status, information on procedures and services, functional prognosis, and resources for discharge.

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