Medicare Compliance & Reimbursement

Rehab hospitals are in line for a 3.3-percent increase in their Medicare payments - but along with the pay boost comes enforcement of a controversial rule that determines whether a hospital qualifies as an inpatient rehabilitation facility. The rate increase is a bit higher than last year's 3-percent hike, according to the proposed rule outlined in the May 16 Federal Register. The Centers for Medicare & Medicaid Services launched the prospective payment system for IRFs on Jan. 1, 2002. More ominously, CMS said May 8 that, starting with cost reporting periods beginning Sept. 30, 2003, it will re-institute enforcement of the "75 percent rule." This regulation requires rehab hospitals to show that at least three-quarters of their inpatient population over the most recent 12-month cost reporting period required "intensive rehabilitation services for 10 serious medical conditions," such as stroke, amputations and brain injuries. Due to worries that fiscal intermediaries weren't enforcing the rule appropriately, CMS suspended enforcement in July 2002. But the respite, it appears, is over.

"We realize that rehab facilities may need time to come into compliance with the 75 percent rule," says CMS Administrator Tom Scully. "But the rule remains extremely important in separating inpatient rehab hospitals from other types of inpatient facilities, and ensuring that Medicare pays for patients who are getting rehabilitation in the most appropriate setting." Lesson Learned: Rehab hospitals have just over four months to be ready to demonstrate their compliance with the 75 percent rule.