Hospital Groups Want CMS to Change Inpatient Rehab Payment Proposal

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By Michael D. Williamson

June 23 — Hospital groups recently told the CMS they are concerned with some parts of the fiscal year 2016 inpatient rehabilitation proposed rule.

The Federation of American Hospitals (FAH) expressed concern about data the Centers for Medicare & Medicaid Services used to construct an inpatient rehabilitation facility (IRF)-specific marketbasket, the group said in a June 22 letter.

Similarly, the American Medical Rehabilitation Providers Association (AMRPA) asked the CMS in a June 22 letter to make several changes to the data and methodology used for the marketbasket update before implementing it. However, AMRPA said it supports the overall marketbasket policy and commends the agency on its effort.

AMRPA is a trade association that represents more than 500 freestanding rehabilitation hospitals, rehabilitation units of general hospitals and outpatient rehabilitation service providers.

Delay Update 

The American Hospital Association also urged the agency to postpone implementation of the new IRF-specific marketbasket until the CMS can ensure it reflects accurate costs for freestanding and hospital-based IRFs, its June 18 letter said.

As part of the payment update, the CMS outlined an IRF-specific marketbasket to replace the Rehabilitation, Psychiatric and Long-Term (RPL) Care marketbasket.

The proposed IRF marketbasket would be based on 2012 data and the RPL marketbasket is based on 2008 data, the agency said. The new marketbasket would be derived using both freestanding and hospital-based IRFs’ FY 2012 Medicare cost report data.

In April, the CMS issued the proposed rule (CMS-1624-P; 80 Fed. Reg. 23,332), which would increase Medicare payments to IRFs by about $130 million in FY 2016, or 1.7 percent. Comments were due June 22.

The Medicare Payment Advisory Commission, a congressional advisory panel, May 27 told the CMS that the payment increase is unnecessary.

Groups' Suggestions 

The proposed IRF-specific marketbasket contains incomplete data on the wages and salary cost weight, the FAH said.

According to the FAH, an analysis by health-care finance consultants firm Dobson | DaVanzo determined omitted data resulted in a 4 percent understatement of the wages and salary cost weight used for the IRF-specific marketbasket.

Moreover, Dobson | DaVanzo found that, in calculating cost weights associated with employee benefits and contract labor for the new IRF marketbasket, more than half the cost reports from both freestanding and hospital-based IRFs that the CMS used contained no data, the FAH said.

“In fact, only sixteen percent of hospital-based units reported contract labor costs,” the FAH said.

“These data deficiencies raise valid concerns about the accuracy of the IRF-specific market basket that CMS has proposed, and must be addressed in the final rule,” the FAH said.

Alternatively, the CMS should consider reverting to the RPL marketbasket until it is confident that the IRF-specific marketbasket reflects reasonably complete and properly applied data, the group told the agency.

AMRPA recommended the agency use the hospital inpatient prospective payment system data as a source for calculating weights for some categories making up the 2012-based IRF-specific marketbasket. It said the agency should use the 2012 data until a significant percentage of all IRF providers submits complete cost reports.

To contact the reporter on this story: Michael D. Williamson in Washington at

To contact the editor responsible for this story: Janey Cohen at

The proposed rule is at

The FAH's letter is at

AMRPA's letter is at

The AHA's letter is at