In a sign of preparing for business under the "75% rule," rehabilitation giant HealthSouth Corp. last week said it plans to create skilled-nursing facilities that could net some of the Medicare patients who no longer will qualify for services at the company's rehabilitation hospitals.
Last year, the CMS issued updated criteria for the so-called "75% rule," which outlines the criteria for classifying facilities as inpatient rehabilitation facilities. Such hospitals are eligible for higher Medicare reimbursements if at least 75% of their total patient population has at least one of 13 clinical conditions. The new rule was to be phased in over three years, beginning in July 2004, but Congress delayed imposing the rule, asking the Government Accountability Office to study the issue and release a report, which was issued in late April.
The American Hospital Association and the American Medical Rehabilitation Providers Association expressed disappointment in the GAO study because it found that only 6% of inpatient rehabilitation facilities were able to reach the 75% threshold in fiscal 2003, but the GAO didn't recommend specific changes to help the other 94% comply. Rather, the study said more research needs to be done before changes -- such as factoring in a patient's functional status -- are made.
The study also found that payments to rehabilitation facilities were more costly than to skilled-nursing facilities for the same treatment. The trade group for skilled-nursing facilities, the American Health Care Association, supported the report and said skilled-nursing facilities could provide the same quality of care as rehabilitation facilities at lower costs.
The CMS has about two months to review the GAO report and make changes to the rule before it is expected to take effect in late June. In 2003, there were 1,256 inpatient rehabilitation facilities, about three-quarters of which were hospital-based units. Under the new rule, Medicare patients that were being admitted to such facilities will likely instead seek care in skilled-nursing facilities because of the new limitations.
For example, before the new criteria, patients who were recovering from hip replacement surgery at inpatient rehabilitation facilities would qualify for one of the conditions. The new rules say patients must be recovering from replacement surgery of both hips before qualifying for one of the conditions.
The GAO report examined the cost of Medicare reimbursements and said "the estimated Medicare per-case payment in 2004 for a patient who underwent a major joint and limb replacement of a lower extremity was $17,135 to an IRF (inpatient rehabilitation facility) and $6,165" to a skilled-nursing facility. Rehabilitation providers say they provide more intensive care and produce better outcomes than skilled-nursing facilities, but they don't have data to support that claim. The GAO report calls for research on the issue and the Medicare Payment Advisory Commission has said there's a dearth of outcome information from post-acute providers.
The main reason there's little data is because skilled-nursing facilities and inpatient rehabilitation facilities use different patient-assessment tools. However, many industry experts said that could change because MedPAC has been studying the benefits of a standardized method.
Don May, vice president of policy at the AHA, said a uniform tool would help the industry better understand the quality of care that is being given by post-acute providers because it would be easier to compare outcome data from patients at rehabilitation facilities with data on patients at skilled-nursing facilities.
The GAO found the pre-admission screening process at inpatient rehabilitation facilities wasn't uniform, and the facilities had become "sloppy" when admitting patients because "there has been no routine review for medical necessity." One CMS fiscal intermediary reviewed 3,000 medical records and found "the need for inpatient rehabilitation was unclear in about 30% to 40%" of the cases, the report said. The GAO called for further review of inpatient rehabilitation facilities' admitting practices.
The AHA and the rehabilitation association said the report didn't go far enough because the GAO didn't recommend changes to the rehabilitation providers' admission practices.
The GAO also said many providers would like patients' functional status to be incorporated into the conditions, but the GAO didn't provide recommendations on how to do so. A functional assessment of patients is completed upon admission at inpatient rehabilitation facilities but not at skilled-nursing facilities.
In a March report, MedPAC recommended that the CMS collect functional data on patients at skilled-nursing facilities upon admission and discharge. Currently, patients are assessed during their stay.
Meanwhile, HealthSouth recommended that the threshold for rehabilitation hospitals receiving the higher reimbursements under the rule should be held at 50%. HealthSouth said it expects to lose 8,200 discharges and $53 million in revenue in 2005 because of the new rule.
HealthSouth didn't give an update on how many facilities it operates, but in December 2004 the company said it had 1,380 post-acute facilities overall, with 275, or 20%, of which were inpatient rehabilitation facilities.