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June 2005

By Malcolm H. Morrison, PhD

Inpatient Rehabilitation at the Crossroads

Providers can lessen the impact of the 75% rule through negotiation

Inpatient medical rehabilitation is at a major crossroads with the Medicare program focused on defining "appropriate" rehabilitation patients and rehabilitation providers, suggesting that Medicare's rules will result in major limitations in patient treatment and reductions in access to inpatient rehabilitation hospitals.

Providers believe that the current Medicare 75% rule will significantly limit the availability of inpatient rehabilitation treatment for large numbers of Medicare beneficiaries. The Centers for Medicare and Medicaid Services (CMS), on the other hand, has suggested that the rule is designed to appropriately distinguish patients who require inpatient hospital treatment from those who can be effectively and efficiently treated in other settings including skilled nursing facilities, outpatient care, and home health care. CMS has also said that rehabilitation providers can, over time, adjust to the requirements of the 75% rule and that it will monitor this adjustment. In addition, both the Medicare Payment Advisory Commission (MedPAC) and CMS are focused on developing a unified payment system for post-acute care, focused on patient characteristics and pay-for-performance policies.

MEDICALLY APPROPRIATE?
Are the goals of efficiency and effectiveness of care and medically appropriate care in conflict? Or could more information about patient clinical conditions, treatment settings, outcomes, and costs be combined with informed dialogue between providers and CMS, leading to a balanced and sound policy that would allow appropriate rehabilitation care for Medicare beneficiaries, be acceptable to providers, and be cost-effective for the Medicare program?

CMS identified a list of "medical conditions" deemed appropriate for inpatient rehabilitation treatment and specified a requirement that-over the next several years-75% of medical rehabilitation patients be diagnosed with these conditions in order for providers to retain their medical rehabilitation hospital status. CMS excluded a very large group of patients requiring joint replacements, and patients having other orthopedic, cardiac, pulmonary, and pain conditions, from being counted under the 75% rule. CMS also imposed additional limits on counting patients with certain arthritis conditions.

In creating these limitations, CMS cited prior research indicating that hospital-level rehabilitation treatment was not necessary for patients with certain types of conditions, and that lower and less costly levels of care produced the same clinical outcomes at lower cost to the Medicare program. At the same time, many of the CMS case-mix limitations have very little or no medical research support. And CMS has encouraged the medical rehabilitation community to provide additional research evidence, which supports inpatient medical rehabilitation treatment for multiple conditions including those currently excluded or limited and others not on the current CMS list of rehabilitation-appropriate conditions under the 75% rule.

Medical rehabilitation providers have recommended that the rule be significantly changed-or ultimately even eliminated-based on scientific information and research concerning the medical appropriateness and outcomes of inpatient hospital rehabilitation. CMS, while supporting the 75% rule, has recognized the need for further research concerning the comparative medical appropriateness and effectiveness of inpatient rehabilitation treatment and has agreed to review the results of such research when they are available. And CMS is working with both the Agency for Healthcare Research and Quality and the National Center for Medical Rehabilitation Research at the National Institutes of Health, on initiating comparative research on the medical appropriateness, effectiveness, and efficiency of inpatient medical rehabilitation treatment. But this new research will need appropriate funding and is likely to require several years before results become available. Providers are very concerned that the transition period for the 75% rule will be completed well before new research results are available and that the full effects of the patient limitations and reductions in patient access will become standardized and will not be changed.

It is not clear whether the interests of inpatient medical rehabilitation providers in serving patients whom they think are medically appropriate always conflict with the interests of CMS in providing reimbursement for rehabilitation patients in the most cost-effective and medically appropriate care settings available. But there is recognition by both CMS and rehabilitation providers that more comparative information on medical appropriateness, resource use, costs, and results of medical rehabilitation treatment in multiple settings would be highly desirable and would likely lead to significant changes in the 75% rule and related policies, including Local Coverage Determination (LCD) review policies of CMS Fiscal Intermediaries.

QUESTIONS AND ANSWERS
An important question, therefore, is whether sufficient medical, including functional, patient data is available or could be obtained that could begin to comparatively evaluate the appropriateness and cost-effectiveness of medical rehabilitation treatment in multiple settings. A second, but critical question is about the willingness of CMS to review such information and make changes to the 75% rule. Based on CMS's request for more information and research, it is certainly reasonable to assume that it would seriously consider relevant, high-quality data on the comparative appropriateness of inpatient medical rehabilitation treatment. This information would also be relevant for payment system and pay-for-performance policies.

Although there is general agreement that major research data on the comparative efficiency and effectiveness of medical rehabilitation in inpatient hospitals and skilled nursing facilities is not available and that more study is needed, this does not mean that currently available data should not be used to improve knowledge and inform CMS policy. First, there is sufficient data to determine the medical severity of rehabilitation patients treated in multiple venues of care and this data can be matched to indicators of functional severity. Second, there is some data available on patient length of stay, discharge destination, and mortality. Third, there is some data on patient functional improvement in different care settings. And finally, it is possible to develop estimates for the costs of treatment in different care settings. Most of this data is available in national data sets and repositories maintained by CMS and could be analyzed by medical rehabilitation providers. In addition, there are some major data sets maintained by large private sector providers of rehabilitation treatment in inpatient hospitals and skilled nursing facilities. And there is capability to retrospectively review valid samples of patient medical records to develop additional data on patient medical conditions, treatment, and results.

While all of this data may appear substantial, its analysis would not be a complete substitute for more thorough prospective research studies that would provide more definite conclusions. Nevertheless, the concern of rehabilitation providers about the 75% rule limitation for large numbers of patients requiring joint replacements and those with other orthopedic and arthritic conditions could begin to be addressed by analyzing available data, evaluating results, and discussing policy alternatives to the current 75% rule with CMS.

SOUND SOLUTIONS
Patients requiring inpatient medical rehabilitation treatment and rehabilitation providers appear to be facing admission and access limits because of policies developed in the absence of a sound, medically supportable rationale. Objections to these policies by rehabilitation providers are not likely to change their implementation or effects. If the goal is to improve the CMS policy through modification, then two things must occur: (1) relevant information and data on the comparative effectiveness, efficiency, and medical necessity for inpatient rehabilitation must be developed and organized; and (2) this information must be provided to CMS using a framework and process of negotiation, based on the analytical findings and related to the CMS policy objectives of more unified payment for post-acute care and pay-for-performance initiatives.

Negotiation can be effective only if rehabilitation providers know their own goals, have information to justify the goals, and identify the best available and acceptable options that will meet their goals. At the same time, when negotiating, providers need to recognize CMS's policy objectives and be prepared to use information to effectively support mutually satisfactory policies to provide medically necessary inpatient rehabilitation treatment for Medicare beneficiaries. The medical rehabilitation industry was successful in using data and information to work with CMS in developing the highly regarded rehabilitation prospective payment system. A similar approach should be used in working with CMS on unified post-acute care payment and pay-for-performance initiatives.

Malcolm H. Morrison, PhD, is president and CEO of Morrison Informatics Inc, Mechanicsburg, Pa, and is a member of Rehab Management's editorial advisory board. He may be reached at (800) 559-8410, or at .

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