By Stuart S. Kurlander, JD, MHA
Hail to a New Chief President George W. Bush’s ascension to the presidency is causing a multitude of changes that will affect the rehabilitation industry. The turnover to a new administration has generated important regulatory changes for the rehabilitation industry. President Bush issued a memorandum on January 20 delaying the effective dates of certain regulations issued during Clinton’s final days in office. The Stark II final rule has been delayed. The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2001 (BIPA) will impact health care services dramatically, and the Health Care Financing Administration (HCFA) has extended the comment period on the inpatient rehabilitation facility (IRF) prospective payment system (PPS) implementation. Plus reform at HCFA is on the horizon. The Bush administration issued a memo on January 20 that delays by 60 days regulations that have been sent to the Office of the Federal Register and published. Unpublished regulations are to be withdrawn for review and approval by the administration. There is a possibility that the 60-day period will be extended. At press time, the effects of the memorandum on various regulations were still being determined. Agencies have been directed that they should not send proposed or final rules to the Federal Register until a Bush-appointed department or agency approves them. Agency heads must also notify the Office of Management and Budget of any regulations that “impact critical health and safety functions of the agency” and should be excluded from review. Stark II Rules Revised Stark II rules were affected by the memorandum. Most of the Phase I document has an effective date of January 4, 2002. However, Section 424.22 (d), which concerns referrals to home health agencies, was to become effective February 5, 2001, or 30 days after the rule’s publication. The Stark II final rule has received good reviews from industry experts. Stark II provisions of interest to rehab providers include:
It is recommended to readers to remember that referrals are prohibited if: a physician is paid based on the amount or value of referrals; the physician has actual knowledge of an indirect relationship with the provider; or the physician or an immediate family member has a financial relationship with the provider. Health care providers should review the Stark II final rule to begin preparing now for the effective date of January 4, 2002. Unless changed by Secretary Thompson, HCFA will again have the authority to issue advisory opinions about Stark rules. BIPA continues Signed by President Clinton on December 21, 2000, BIPA has an impact on every aspect of health care, including the rehabilitation industry. Extended for 1 more year, the current moratorium on the physical therapy and occupational therapy caps will run through 2002. The same provision extends the requirement for focused reviews of therapy claims through 2002. Medicare will also make payment for inpatient services provided by rehabilitation hospitals. In FY 2002, a 2% increase will occur with respect to the administrative costs for completion of patient assessments. Providers will have the opportunity to elect the full prospective payment rate without phase-in. BIPA also alters payments for inpatient care provided by long-term hospitals. Beginning with FY 2001, BIPA raises the cap amount by 2% and increases the target amount by 25%. Neither of the aforementioned amounts is to be taken into account in determining the PPS under Section 123 of the Balanced Budget Refinement Act (BBRA). The Secretary is directed by BIPA to consider basing long-term care hospital PPS on the use of existing or refined diagnosis related groups (DRGs). BIPA also affects the PPS per diem payments for Part A services to patients in skilled nursing facilities (SNFs) by altering the formula for market basket update reduction. For the period October 1, 2000, through March 31, 2001, the multiplier will be the market basket minus one percentage point. For the remainder of FY 2001, the update factor will be the market basket plus one percentage point. For FY 2002 and FY 2003, the multiplier will be the market basket index minus .5 percentage point. These changes for SNFs are in addition to the temporary increases affected by BBRA. DME suppliers can look forward to the bulk of their BIPA relief this summer, according to HCFA program memorandum AB-01-26. The OIG Issuance The Office of Inspector General (OIG) released Medicare Payments for Psychiatric Services in Nursing Homes: A Follow-Up (OEI-02-99-00140), dated January 2001. This inspection report assesses Medicare Part B payments for nursing homes, including SNFs, and finds that 39% of psychiatric services in nursing homes, including SNFs, are inappropriate because of inadequate documentation, lack of medical necessity, or lack of general clarity. Among other recommendations, the Inspector General strongly urges HCFA to work with carriers to develop guidelines for psychiatric services. The OIG also issued reports on the accuracy of resource utilization group codes, which are used to spot potential fraud and abuse trouble in the SNF PPS. The mix of higher and lower coding differences suggested confusion by providers, prompting the OIG to suggest that HCFA conduct further training and clarify requirements and definitions. The major therapy associations have submitted formal comments to HCFA regarding the PPS for inpatient rehab facilities. Industry-wide issues include: the hasty implementation date for the PPS; the complexity of the Minimum Data Set for Post Acute Care (MDS-PAC) assessment instrument; and clearer explanation of the comorbidities and case mix group handling. Another effect of new officials in Washington is the push to explore changes at HCFA. The House Ways and Means Subcommittee on Health has begun examining ways to improve HCFA’s efficiency and organizations. Issues of interest to rehabilitation providers that the subcommittee and others will explore include:
I will provide future updates on these important hearings. Stuart S. Kurlander, JD, MHA, is a health care partner at Latham & Watkins, Washington, DC.
