The Centers for Medicare and Medicaid Services (CMS) has released its final rules [PDF] for the Prospective Payment System (PPS) for Inpatient Rehabilitation Facilities (IRFs) and Skilled Nursing Facilities (SNFs).
The IRF PPS rule [PDF] will increase reimbursement for IRFs by 3.2 percent in fiscal year (FY) 2008 and increases the high-cost outlier threshold to $7,362 per stay from the $5,534 in FY2007. The rule further implements components of Medicare's controversial "75% Rule" that requires all IRFs to maintain a certain percentage of patients who have one of thirteen diagnoses in order to keep their IRF classification under Medicare. Currently, IRFs must maintain a 65% threshold; however, the rule states that as of July 1, 2008, the threshold will return to 75 percent, as mandated by the Deficit Reduction Act of 2005. Additionally, the rule states that although IRFs may currently use a patient's comorbid condition to count toward compliance with the 75% Rule, as of July 1, 2008, the condition must be primary.
Patient and hospital organizations have opposed the return of the 75% threshold claiming that it restricts access for those with diagnoses that do not meet one of the thirteen qualifying conditions. Conversely, the nursing home industry has strongly supported implementation of the rule, stating that SNFs and other less intensive settings can provide similar levels of rehabilitation as IRFs at lower costs.
As earlier reported, the House of Representatives passed Medicare legislation that would freeze implementation of the 75% Rule at a 60% threshold and maintain current treatment of comorbidities in terms of compliance.
The SNF PPS rule [PDF, 2.6 MB] increases reimbursement rates for Part A residents by 3.3 percent in FY2008, increasing payments by approximately $690 million. The Medicare Payment Advisory Commission as well as the President's budget recommended a zero percent update but CMS chose to apply a new 2004 market basket that measures price fluctuations for goods and services purchased by SNFs.
PPS payments for Part A residents are based on daily rates that cover almost all services and other expenses. Residents are billed for evaluation and treatment sessions and diagnostic tests paid under the Part B Medicare Physician Fee Schedule after Part A benefits are exhausted (usually 100 days).
For further information, please contact Mark Kander, ASHA's Director of Health Care Regulatory Analysis, via e-mail at mkander@asha.org or by phone at 800-498-2071, ext. 4139.
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