IRF, SNF and Hospice 2012 Payment and Policy Updates

According to a press statement issued by the Centers for Medicare and Mediciad, payments for services provided by inpatient rehabilitation facilities (IRF) services will increase by 2.2 percent and payment for hospice service will increase 2.5 percent in fsical year (FY) 2012, but payments to skilled nursing facilities (SNF) will decrease by 11.1 percent in FY 2012.  In addition, new quality reporting systems will be put in place for IRFs and hospices beginning in FY 2012.

Inpatient Rehabilitation Facilities

CMS projects that total payments under the IRF PPS will increase by $150 million in FY 2012 to more than 200 freestanding rehabilitation hospitals and more than 1,000 IRF units in acute care hospitals and critical access hospitals during FY 2012, accrding to the IRF Final rule.

Under the new quality reporting initiative,  IRFs will submit data on two quality measures, a urinary catheter-associated urinary tract infection measure and a measure for new or worsening pressure ulcers, with a third measure—“30-day Comprehensive All Cause Risk Standardized Readmission”–under development.  IRFs that do not submit performance data will see their payments reduced by two percentage points beginning in FY 2014. 

The IRF Final rule also: (1) updates the case-mix group relative weights using FY 2010 IRF claims and FY 2009 IRF cost report data; (2) freezes the facility-level adjustment factors for FY 2012 at FY 2011 levels for one additional year; (3) allows IRFs to receive temporary adjustments to their FTE intern and resident caps if they take on interns and residents who are unable to complete their training because their original IRF either closed or ended its resident training program; and (4) allows IRF and inpatient psychiatric facility units to expand in the middle of a cost reporting period.

Skilled Nursing Facility Payment Reduction 

CMS found that the parity adjustment made last year in FY 2011, which was intended to ensure that the new resource utilization group (RUG-IV) system would not change overall spending levels from the prior year, resulted in a significant increase in Medicare expenditures during FY 2011. This increase in spending was primarily due to shifts in the utilization of therapy modes under the new classification system differing significantly from the projections on which the original parity adjustment was based.  To address this unexpected increase CMS is recalibrating the case-mix indexes (CMIs) for FY 2012 to restore overall payments to their intended levels on a prospective basis. 

 The SNF Final rule makes a number of additional changes including; (1) modifying the patient assessment windows and grace days to minimize duplication and overlap in observation periods between assessments, (2) makes several changes in reporting the use and need for therapy services, and (3) announces that proposed provisions regarding ownership disclosure requirements set forth in the Affordable Care Act will be finalized at a later date.

Hospice Payments

The estimated hospice payment increase of 2.5 percent for services provided in FY 2012  is the net result of a 3.0 percent increase in the “hospital market basket,” an indicator of industry-related price increases, offset by an estimated 0.5 percent decrease in payments to hospices due to updated wage index data and the third year of CMS’ seven-year phase-out of a wage index budget neutrality adjustment factor.

Beginning in FY 2012 CMS will change the way it counts the number of Medicare hospice beneficiaries for a given cap year based on the number of days of care the patient received in that cap year for each hospice.  Hospice providers who do not want a change in their patient counting method to elect to continue using the current method.

The hospice Final rule also implements a hospice quality reporting program. The measures that are being adopted in this Final rule for the FY 2014 program are one measure endorsed by the National Quality Forum related to pain management and one structural measure that assesses whether a hospice administers a Quality Assessment and Performance Improvement (QAPI) program that contains at least three indicators related to patient care. Hospices failing to report quality data in 2013 will have their market basket update reduced by two (2) percentage points in FY 2014.