By Cherilyn G. Murer, JD, CRA
The Hidden Danger HCFA’s proposed transfer rule for inpatient rehabilitation. The Health Care Financing Administration (HCFA) proposed rule outlining the requirements for the prospective payment system (PPS) for inpatient rehabilitation has been of great concern for rehabilitation facilities across the country since its publication in November 2000. The focus in the industry has been on the proposed payment rates, the burdensome introduction of the minimum data set (MDS) for post-acute care, and the somewhat surprising disproportionate share formula. However, there is a little discussed provision regarding transfers that could have a profound effect on many facilities. The primary objective of PPS for any venue is to reach the most effective reimbursement strategies for efficient and appropriate levels of care. HCFA says that a transfer policy should provide payments that accurately reflect resources used and services provided and should eliminate incentives to prematurely discharge patients. In the case of inpatient rehabilitation, the payment rates are slated to be adjusted according to the number of days a patient remains in a facility if the patient is then transferred to a designated type of facility. The rule states: “Matching payment as closely as possible to expected costs is the best way to reduce opportunities for financial considerations to affect clinical decisions.” The Inpatient Rehabilitation PPS Transfer Rule is similar to the transfer rule currently in effect for inpatient hospitals. For inpatient rehabilitation facilities, however, the rule covers all patient diagnoses. As published in the November 3, 2000, proposed rule, the transfer rule is as follows: If a patient is transferred from the inpatient rehabilitation facility to one of four venues—another rehabilitation facility, an acute inpatient hospital, a long-term care hospital, or a nursing home that accepts payment under Medicare or Medicaid—then the patient’s length of stay must be reviewed. As the rule currently stands, a patient who is discharged to home, to outpatient therapy, to home health, or to a day rehabilitation program is not considered a transfer. The proposed rule has published an appropriate length of stay (LOS) based on data that have been gathered from existing facilities for each case mix group (CMG), which is the patient classification system for PPS for inpatient rehabilitation. This published LOS becomes the benchmark for the application of the transfer rule. If a patient remains in the facility for more than 3 days, which is the defining length of stay for a short stay carrying its own payment classification, but fewer days than defined by the CMG, the transfer payment methodology is triggered. The transfer payment methodology proposes a per diem-based payment for the number of days of care in the facility prior to a transfer. Calculating Correctly The transfer payment methodology involves calculating an unadjusted per diem rate for the particular CMG by dividing the unadjusted payment rate for the CMG by the published LOS. The unadjusted per diem rate is then multiplied by the number of days that the patient was treated in the facility to produce the unadjusted transfer payment rate. Once an unadjusted transfer payment rate is determined, the rate must be adjusted by the facility-specific factors to arrive at the final adjusted transfer payment rate for the specific patient (see Table 1, page 47). The result of these complex calculations is the most appropriate payment to the inpatient rehabilitation facility for a patient transferred out of the facility. Implementation Strategies With the implementation of new reimbursement methodologies for inpatient rehabilitation, the compliance requirements for participation in the Medicare program remain the same. In other words, the 3-hour rule, the 75% rule, and medical necessity remain critical requirements for inpatient rehabilitation facilities. It will be imperative for facilities to closely monitor patient LOS. To accomplish this task, precise documentation, clear staff attention, and accurate and timely data systems will be mandatory in an inpatient rehabilitation facility. Facilities must be aware of the publication date of this rule and carefully review its contents, once published. The statutory authority for PPS for inpatient rehabilitation refers to early transfers as transferring a patient from a rehabilitation facility to another site of care. The statute, however, does not define site of care. As the proposed rule discussed, the site of care could be defined as an institutional site or more broadly as a provider site. Currently, the proposed rule defines site of care as only an institutional site as discussed above. However, there will be more consideration given to expanding the definition to provider site to include, as transfers, discharges to home health, outpatient rehab, and day programs. After more analysis, HCFA can better assess whether these services should be considered to the extent they can determine when home health and outpatient services are used as a substitute for inpatient rehabilitation, rather than in the normal progression of care. HCFA is considering instituting a monitoring system to capture data on patient transfers. Additionally, HCFA will examine the distribution of costs over the patient LOS. Currently, the payment methodology is based on the assumption that costs are distributed evenly over the course of a stay. If it is determined that there is a great variance in cost over time during the course of a patient’s stay, HCFA could change its payment methodology for transfers to more accurately reflect the costs of care. Inpatient rehabilitation facilities can minimize the financial and behavioral impact of the transition to PPS by being prepared both organizationally and psychologically. Leadership, dissemination of information, and new practice procedures will be paramount. Planning in the areas of finance, technology, staffing, and organizational orientation can help smooth the transition period. Be aggressive in your implementation plan and your facility will benefit. Cherilyn G. Murer, JD, CRA, is CEO and founder of the Murer Group, a legal-based health care management consulting firm in Joliet, Ill, specializing in strategic analysis and business development. She can be reached at (815) 727-3355 or via the Web at www.murer.com. Editor’s Note: The three other tables that accompany this article are posted with the online version at www.rehabpub.com.
