Medicare Compliance & Reimbursement

...but it will also cut standard payments.

Good news for inpatient rehab facilities: The Centers for Medicare and Medicaid Services has cut the IRF outlier threshold amount in half - but facilities will also see a 1.9 percent across-the-board reduction in standard payment amounts in fiscal year 2006.

CMS issued its final rule on Aug. 1, which outlines FY 2006's policy and payment-rate changes for IRFs. The final rule provides a 3.6 percent market-basket increase - 0.5 percentage points higher than the increase CMS projected in its proposed rule.

The outlier threshold for unusually costly cases will be $5,132, which is less than half of last year's $11,211 threshold. The final rule will also make payment adjustments to teaching hospitals to better compensate their higher costs of care.

Approximately 4 percent of IRFs will change their geographic designations with the new Core Based Statistical Area market area in FY 2006, but 66 percent will either experience no change or an increase in their wage indexes, CMS says.

CMS is allowing IRFs one year to transition to the new CBSAs. Further, CMS will implement a "hold harmless" policy to cushion the impact on existing rural providers who are adversely affected by the CBSA designation methodology. CMS will publish the final rule in the Aug. 15 Federal Register.