Skilled-nursing, outpatient and home health providers all have had their dates with Medicare's prospective payment system. Now it's rehabilitation hospitals' turn.
HCFA last week unveiled its proposal for the inpatient rehabilitation PPS. As required by the 1997 Balanced Budget Act, the PPS is intended to reduce payments to providers by 2%, compared with the cost-based system that the PPS would replace in April.
That translates into $1.5 billion in savings for the Medicare program during seven years starting in fiscal 2001, HCFA said. In fiscal 1996, Medicare spent $4.3 billion on inpatient rehabilitation.
For-profit providers are eager to adopt the PPS, Thomas Scully, president and chief executive officer of the Federation of American Hospitals, said. The biggest players, such as HealthSouth Corp., Tenet Healthcare Corp. and HCA-The Healthcare Co., believe their costs are below average and expect to do well under the PPS.
HealthSouth operates 96 rehabilitation hospitals, and Tenet and HCA have rehabilitation units within many of their acute-care hospitals.
"Once they've figured it out and see how it works, they're pretty happy," Scully said. "It looks like it's going to be pretty good."
HCFA published the proposed regulations implementing the new system in the Nov. 3 Federal Register; comment period is 60 days. The agency is uncertain how long after the comment period it would take to publish the final rule.
Under the proposed system, the PPS would set up per-discharge payments similar to the DRGs that Medicare uses to pay hospitals for acute-care services. The system would apply to both rehabilitation hospitals and units within acute-care hospitals.
Reimbursements would be adjusted to account for the acuity level of patients, for regional differences in wages, for providers who care for a high proportion of low-income patients and for rural providers.
HCFA would implement the new system during a two-year transition period. During the transition, a provider's historical costs, along with the PPS rates, will still be taken into account to determine reimbursements.