Medicare Compliance & Reimbursement

How the new rule will change the rehab industry.

Inpatient rehab facilities have been waiting with bated breath for the final version of the 75 percent rule -- and the wait is finally over. Some provisions of the rule leave facilities breathing a sigh of relief, while others are leaving them gasping for air.
 
"The proposed rule was such a shock in terms of the changes required," recalls attorney Jeffrey Micklos with Foley & Lardner in Washington. "The final rule is helpful in that it moderates some of the aggressive proposals." The rule was published in the Federal Register on May 7.

Major change: Possibly the largest departure from the proposed rule to the final rule has to do with the timetable for change. Under the original rule, which remains in effect until July 1, 75 percent of admissions of the total patient population had to meet one of the qualifying conditions for the facility to be classified an IRF. Under the proposed rule, that percentage would be lowered to 65 percent for three years and then either would be changed back to 75 percent or a new regulation would be written.

The final rule works in phases, ultimately returning to the original 75 percent threshold in 2007. Here's how it works: Between July 1, 2004 and June 30, 2005, 50 percent of admissions must meet one of the qualifying diagnoses; on July 1, 2005 that percentage raises to 60 percent; it raises again to 65 percent on July 1, 2006, and leaps to 75 percent on July 1, 2007.

The first two years of this plan represent a "major concession" on the part of CMS, since the agency was intent on keeping the percentage higher, says Micklos. "The idea is to give facilities time to change their patient mix if they need to do that to comply," notes Jason Levine, senior consultant with Murer Consultants in Joliet, IL.

Don't be fooled: This phase-in period is "a windfall in the short run," says consultant Fran Fowler with Fowler Healthcare Affiliates, Inc. in Atlanta. But facilities shouldn't be lulled into a false sense of security. "When they pull it up to 65 percent, that's when you're really going to see a hit," Fowler warns.

The changing percentages creates a case management challenge that providers will need to stay on top of, says Levine. Most providers have a daily management tool, which they can use to track case mix, Micklos says.

Tip: Providers should create an Excel spreadsheet with 14 columns (one for each of the 13 qualifying diagnoses and one for patients that don't count toward the threshold), suggests consultant Ann Lambert Kremer with Baker Newman & Noyes in Portland, ME. Each time they admit a patient, they should make the appropriate entry in their spreadsheet, so "on any given day, you know exactly where you're at," she says. An added bonus to this strategy is that if the facility is audited, it can immediately produce proof that it's in compliance, she notes.

Good news: In the proposed rule, CMS deleted "polyarthritis" from the list of qualifying conditions and replaced it with the three more specific arthritis-related conditions. The final rule maintains that change, but also adds knee or hip joint replacement to the mix. "It's great that CMS established a category that talks about knees and hips," says Micklos. "CMS has recognized for the first time that there are knee and hip patients that require inpatient rehab."

Bad news: Unfortunately, this change doesn't go far enough to address industry concerns and is still quite restrictive, Micklos continues. That's because in order for a knee or hip joint replacement to count as a qualifying condition, the patient must:

1. have undergone simultaneous bilateral knee or bilateral hip joint replacements;
2. be extremely obese, with a body mass index of at least 50 at the time of admission; and/or
3. be 85 years or older on admission.

"This will be very controversial," predicts Levine. Since the patient needs significant comorbidities for a knee or hip joint replacement to qualify, many simply won't meet the criteria, experts note.

In fact, these criteria will probably "knock out" about half of the population of patients receiving knee and hip replacements, forecasts Fowler. The age requirement will be an especially major stumbling block, since most patients aged 85 and older are in nursing homes, not acute inpatient rehab, she points out.

CMS is using age 85 as a way to define "frail elderly," explains Micklos. But the agency plans to continue to study this definition, giving the industry a chance to push for decision-makers to lower this age threshold, he tells MLR.

Hot spot: CMS has not backed off on its original proposal to require prior, unsuccessful therapy interventions, notes Micklos. "That's an area that's going to need further clarification," he insists. The rule states that to qualify for inpatient therapy, the patient must have already received an "appropriate, aggressive and sustained course" of therapy -- but CMS doesn't offer any definitions for those words. There's no clear, manageable standard, he laments.

Editor's Note: The complete rule is at http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/2004/04-10153.htm.