Trends and Issues: Interview with Cherilyn G. Murer, JD, CRA

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August/September 2003

By Sarah Schmelling

Cherilyn Murer looks back at a decade of rehabilitation legislation.

For the last 10 years, Rehab Management has had the great pleasure of presenting “Trends and Issues” columns by Cherilyn G. Murer, JD, CRA, CEO and founder of the Murer Group, a legal-based health care management consulting firm in Joliet, Ill. Through her vast experience and clear presentation, readers have learned a great deal about the legislation, political and social trends, coding, and financial issues that have affected the rehab market over the years. In this, her tenth anniversary issue, Murer shares her observations on a fascinating decade in rehabilitation trends.

Rehab Management: Looking back over the last 10 years, how has the role of inpatient rehabilitation in the continuum of care changed? Is it more important or less important?
Cherilyn Murer: As we look at postacute venues, rehabilitation really surged between 1985 and 1990. Within those years, we saw tremendous growth of inpatient rehabilitation units...we were seeing the proliferation of smaller units with 15 to 20 beds, and this was different from what we had had before, which was really the larger rehabilitation hospitals. Of course, we had rehab units, but they were usually large rehab units. [The situation] stabilized for about a 10-year period, and then it was in a tenuous position in 2000, when the prospective payment system (PPS) was proposed. There was a lot of anxiety as to what would happen to rehab units, and when we did get the PPS system last year, everyone really gave a sigh of relief because rehab reimbursement was strong.

RM: Given the Centers for Medicare & Medicaid Services (CMS) decision to again enforce the 75% rule, do you think that inpatient rehabilitation hospitals and units will remain viable?
CM: This is one of the issues that is tenuous right now in terms of the future of rehabilitation units. The 75% rule existed from the early 1980s, when the original conditions of participation were established. As time went on, there was less enforcement of that rule; although it never did go away, it was always a part of the condition of participation. There was a lot of latitude taken in regard to the 75% rule, particularly related to the definition of polyarthritis of the hips and knees. Orthopedic patients made up, in some instances, as much as 40% of a rehabilitation unit.

About a year ago, there was a moratorium, not on the rule, but on the enforcement of the rule, so that CMS could go back and reflect on its appropriateness. CMS came back and said the rule stands, that it will enforce the rule stringently, and that there is an impact on the acceptance of knees defined as polyarthritis. And that remains a bit ambiguous in terms of CMS’s position. There is a lot of lobbying going on—by the American Hospital Association (AHA) in particular. They are really working hard to convince CMS that it needs to go back and revamp the regulation in the 10 categories, and AHA’s position is that those conditions are not representative of the rehabilitation needs of patients today.

I’m not sure where that is going to go. CMS has not to my knowledge responded to the lobbying that is being conducted, and that means right now, rehabilitation units need to be cautious about the inclusion of, in particular, knee patients and elective surgery hip patients defined as polyarthritis, because there may be denials related to that. And that really looks to where the inpatient rehab hospitals are. Inpatient rehab hospitals are strong, more so because they have a diversified patient mix. The tertiary rehabilitation hospitals that focus on multi-trauma, stroke, spinal cord injuries, and neurological disorders are all doing quite well, especially under PPS. But they too need to be cautious as to their orthopedic patients and the enforcement of the 75% rule.

RM: What are your thoughts on comprehensive outpatient rehabilitation facilities (CORFs) as venues for outpatient rehab?
CM: I’ve always been a proponent of the CORF. My background is that I was an administrator of one of the first CORFs in the country. It has always been valuable because of its diversity in services—which is why the legislation was established, to provide a venue to deliver services in a comprehensive manner. Now what has happened in the translation, in the practical implementation of the legislation, is that many outpatient facilities that were licensed as CORFs did not diversify and they were really oriented to physical therapy; they did not utilize the asset of the licensure—its diversity. But its diversity is complex to execute. So I think that CORFs are misunderstood. It has been a venue that has frustrated individuals. But I think it is a strong outpatient venue that allows you to take multiple diagnoses and provide a full array of services to patients.

RM: What can be done to help people better understand CORFs?
CM: Rather than focus so much on licensure as the definition, I think that hospitals or individuals first have to decide what type of business they want to be in and the type of patient population they want to serve. If they’re looking to serve a diverse patient population with multiple medical functioning needs—such as neurological patients, respiratory/pulmonary patients, or oncology patients—then the CORF license is for them. I think if they’re looking to put together a physical therapy, sports medicine, or orthopedic practice, then the licensure itself is not necessary. Multiple services are what differentiates the CORF from an outpatient PT clinic, therapy as an extension of a physician’s practice, or simply an outpatient therapy department of a hospital.

RM: In other reimbursement trends, do you think a dollar cap on outpatient therapy will ever actually be enforced?
CM: That has really been a hot issue. When the cap was first proposed, [people] almost immediately determined that it needed to be rescinded. It is an extraordinary limitation on services that are beneficial to the health care system, because the more we can provide services on an outpatient basis, the better off the entire American health system is in moving patients from inpatient to outpatient environments. By limiting so stringently the outpatient payment, we’re saying that patients should not receive services at all or that we should keep them on an inpatient basis, which is extremely costly. Upon initiation of that legislation, almost immediately, we had a moratorium placed on that cap. We’ve had that moratorium for the past 2 years. I don’t think that the cap will ever come to any great fruition. Right now there’s a bill in Congress—in committee—to actually rescind the cap, and what I find very interesting is that there are more than 200 bipartisan cosponsors of the bill in the House to abolish the cap. So I think we will see that cap abolished, and that will be in the best interest of patients and the health care system as a whole.

RM: How have reimbursement trends over the last decade improved the position of the long-term acute care hospital (LTACH) in the continuum of care?
CM: I’m a very strong proponent of LTACHs. We began in 1990 working with establishing LTACHs, primarily for nonprofit hospitals and health systems, and we have developed about 30 in this country over the last 10 years. The LTACH is the right type of venue to serve a small number of patients who were truly the outliers in short-term acute care hospitals. The LTACH provides services to about 25% to 35% of the total patient base of an acute care hospital that really needs a length of stay outside of the prescribed length of stay for short-term acute.

What has happened in reimbursement over the years is, all of the legislation for the hospital-within-a-hospital, starting in ’94 and ’95, ’97 with the Balanced Budget Act, 2000 with BIPA, 2002 with PPS, 2003 with the amendments, and just this month with the final rules, continues to increase the reimbursement for LTACHs.

Now one might ask why Congress is doing that. I believe it’s to right-size the short-term acute. If we can minimize any outliers in short-term acute, then the amount of money that is paid under the short-term acute PPS system will be appropriate for reimbursement to the hospital…. It really does put the patient in the right place at the right time for the right reimbursement. And I see the longevity of LTACHs to have no limit. We’ve gone through enough revisions in LTACH structure and reimbursement by CMS over the last 10 years, and now, as of the final rules of June 2003 and the PPS, I think the system will be in place for at least the next 5 to 10 years. I think we have a very strong venue that we’re going to see for the next decade as an integral part of the continuum of care.

RM: What is the status of rehabilitation hospitals? Is the market favorable for freestanding rehab hospitals?
CM: Rehab hospitals are still a very important venue. They haven’t grown as quickly as the LTACHs, but they’ve been in the market for a long time. I think we need to continue to emphasize the tertiary rehabilitation hospitals that deal with very severely disabled individuals, in particular expertise related to spinal cord injury, major multiple trauma, and neurological disorders, with a real focus on outcome so we can see gains with patients who have functional disabilities. Their role is critical in the health care market, and their reimbursement is good.

RM: You have written often about case management. How has the case manager’s role in rehabilitation grown over the last 10 years?
CM: Case management continues to be an important part of an effective continuum of care, but I think that case managers struggle politically within health systems to identify their value and their viability. In an article I wrote for Case Management in 1996, I was extremely optimistic in terms of the growth of the importance of case management. I have not wavered in my belief that case management is the key to moving patients along the continuum, but case managers still struggle to find their role within their health system.

I think this struggle will continue, and that with their effort and continued tenacity, hopefully they will prevail, because without an effective case management system, we will not move patients appropriately along the continuum of care. That means it is important for case managers to continue with in-depth education, so they are knowledgeable about the regulatory differentials within postacute venues...as well as the financial impact of discharging patients along that continuum of care. They need to put great effort into continuing their education and knowledge base so they are viewed as the key vehicle for determining appropriate and timely discharges from short-term acute.

RM: Congress and CMS are considering limiting physician ownership of specialty hospitals. Do you think there is any future in physician hospital ownership?
CM: That’s a hot-button issue in our health care society today. The issue is tenuous, and it’s certainly fraught with public policy discussion; when you take key services out of a hospital, such as cardiac or orthopedic in particular, what you’re doing is pulling some financially viable services from the community hospital and leaving it with some of the less desirable reimbursement opportunities. It enhances the schism between hospitals as providers and their administrators and physicians. On the other hand, we have seen great success in outcomes with boutique hospitals such as spine or orthopedic hospitals. With physician-owned, there won’t be any prohibition for multiple diagnoses; with multiple physician specialties providing services, I don’t think there will be any difference between being a physician-owned hospital or an investment-owned hospital.

RM: What regulatory trends over the last decade do you think are of the most importance to rehabilitation professionals?
CM: I think without a doubt the emphasis on postacute venues, in particular as identified in the 1997 Balanced Budget Act, was one of the most significant dimensions of establishing our health care policy that impacts rehabilitation professionals. The act spoke only of postacute venues, and there was a lot of discussion in terms of right-sizing the various postacute venues to try to stabilize them so you wouldn’t have great variances in reimbursement; and I thought all of that was positive....[This] reinforced that American health care policy is dependent on a continuum of care that includes a myriad of postacute venues, and that means we are also looking at the physical functioning and restorative care needs of patients.

RM: What other trends will we see over the next decade?
CM: I think we will probably see a trend of stabilization now. We have gone through probably 5 to 7 years of dramatic and traumatic change—in the establishment of the PPS systems within all of the postacute venues....So I think what we’ll start to see now is that these postacute venues will stabilize and mature, and each of these venues we’ve discussed will continue to grow and prosper. I think the legislation will be simply a reinforcement and a tightening of these venues, an assurance that there’s consistency in the enforcement of this regulation. I think we’re in for a decade of stabilization.

Sarah Schmelling is senior editor of Rehab Management.

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August/September 2003