Medicare Compliance & Reimbursement

Experts reveal the hidden fallout from CMS' recently proposed rule.

There's still a lot to hate about the Centers for Medicare & Medicaid Services' proposed "65-Percent" classification rule for inpatient rehab facilities, but hospital outpatient departments, skilled nursing facilities and comprehensive outpatient rehab facilities may find a silver lining in this dark cloud.

Since CMS announced the rule, the following five points have become clear:

1. The new rule's not much different from the old "75-percent" rule. The new rule is still just a tool for the government to steer patients to lower-cost, less-intensive places for rehabilitation, contends Lyndean Brick, senior vice president at the Murer Group, a consulting firm in Joliet, IL. The government is denying that it is medically appropriate for patients without very specific, complex needs to receive treatment at inpatient rehab, she says - especially when you look at it in light of recent medical necessity reviews of inpatient rehab facilities.

2. The rule is flawed because it's not based on the 21 RICs. "This new rule leaves a lot of room for gray areas," says Ann Lambert Kremer, a health care consultant with Baker Newman & Noyes in Portland, ME. She contends that a rule based on the 21 Rehab Impairment Categories, or RICs, would be easier to understand and fairer to facilities and their patients.

"A lot of providers are disappointed that the twelve conditions do not directly tie to the 21 RICs," Kremer says. Providers can still lobby to have the rule tied directly to the RICs, she adds, noting that the 65-percent rule was issued after CMS received 6,900 letters protesting the old 75- percent rule.

CMS will accept comments on this proposed rule until November 3.

3. The new rule may push some rehab facilities out of business. If rehab units are "orthopedically driven," patients will not meet the admission criteria and some facilities "may not survive," Brick warns.

The proposed 65-percent rule could shut down rehab providers, agrees Fred Perra, service line administrator for rehabilitation at Faxton-St. Luke's Healthcare in Utica, NY. Perra thinks the rule "disregards" basic rehab principles.

Perra explains that his facility serves an older community, where cardiac interventions and joint replacements are common. "Neither one is in [the proposed rule]," he says. He estimates that his facility would wind up with about 30 to 40 percent of patients satisfying the conditions listed in the proposed rule - nowhere near the 65-percent requirement. If his facility does adjust to the rule, he adds, it will not meet the community's needs.

Brick anticipates that smaller units may go out of business because they won't be able to adapt their management and business practices to apply the complex rule.

4. Joint replacement patients will be hit hard. CMS anticipates that between 40 and 80 percent of all joints presently treated in inpatient rehab units will no longer qualify. "That's huge," Brick says, but you wouldn't know it from a quick read-through of the rule.

That's because the rule doesn't put it that way - these qualification percentages are hidden in the description of how much money the government will save. "Depending on the range of assumptions relating to joint replacement cases... the estimated net savings would be 151 million if we assume 20 percent of joint replacement cases meet the proposed criteria," CMS states in the proposed rule's impact summary.

Brick is quick to point out that if 20 percent meet the criteria, then 80 percent will not. The proposed rule also states that Medicare will save $42 million if "60 percent of the joint replacement cases meet the proposed criteria." So, although these statements taken together are vague and contradictory, it looks like "somewhere between 80 and 40 percent of our present joint replacement patients will be sent to another venue of care or will not receive follow-up treatment," Brick explains.

The result is that some patients may simply be sent home. "Nobody wants to say that," Brick says. Some patients won't receive adequate care in outpatient environments, adds Perra, and with a potential therapy cap looming over everything but hospital outpatient units, "they're not going to be able to go anywhere," he says.

5. Hospital outpatient, SNFs and CORFs may be positioned to succeed. Lower-cost care venues should pick up some of the non-qualifying patients as IRFs struggle to meet their 65-percent requirements. "You're going to see a large increase in SNF utilization," Brick predicts. "That's who's going to pick up the majority of those patients." CORFs may also experience a comeback because of this rule, she adds.

But these developments won't necessarily benefit patients. "Are they going to get the same level of therapy that's actually going to return them to work or return them to home?" asks Susan Church of the Bryn Mawr Rehab Hospital in Malvern, PA. Patients who undergo treatment in SNFs may experience limited recovery in longer stays than in IRFs, and possibly incur greater expense, she explains. Church knows of doctors who've seen patients stuck in SNFs for three months when more intensive care at an IRF might have lasted three weeks.

"In a nursing home [patients] are in there longer and they may not recover functional ability to become independent," Church argues. "Contrast this to an acute rehab facility where they get intensive rehabilitation and return to independent status and normal lifestyles faster and more completely."