Please contact Rochelle Archuleta, AHA senior associate director of policy, at (202) or

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1 INPATIENT REHABILITATION FACILITY PPS: PROPOSED RULE FOR FY 2015 AT A GLANCE The Issue: Contact NAME, TITLE, at (202) 626-XXXX or EMA On May 7, the Centers for Medicare & Medicaid Services (CMS) published its fiscal year (FY) 2015 proposed rule for the inpatient rehabilitation facility (IRF) prospective payment system (PPS). The Under Issue: the proposed rule, IRFs would receive a 2.7 percent market basket update, which Arial would 12pt be offset by a 0.4 percentage point cut for productivity and an additional 0.2 percentage point cut required by the Affordable Care Act, as well as a 0.1 percentage point increase Our for Take: payment changes for outlier cases. CMS estimates that, collectively, these payment Arial changes, 12pt among others, would produce a net increase of 2.2 percent ($160 million) over FY 2014 payment levels. The regulation also proposed to further narrow the cases that count What under You the 60% Can Rule Do: presumptive test and make changes to the IRF quality reporting program. Arial 12pt Our Take: We are Further pleased Questions: that CMS proposed a positive net update for IRFs. However, we are concerned that CMS is proposing to further narrow the cases eligible for presumptive compliance The Issue: with the 60% Rule even beyond the narrowing it finalized in its FY 2014 rulemaking. Arial 12pt The AHA plans to address this concern and to weigh in on CMS s proposal to collect more detailed information on how IRFs provide group therapy in its comments to the agency on the proposed rule. What You Can Do: Share this summary with your senior management team to examine the impact of these payment changes on your organization for FY Participate in an AHA member call on Thursday, June 5 at 3:00 p.m. ET to provide feedback on your concerns with this regulation. Invitations for this call were ed to AHA members. Please Camille Fernands at cfernands@aha.org with questions or to register. Submit comments to CMS by June 30 to explain the impact the regulation would have on your patients, staff and facility. Further Questions: Please contact Rochelle Archuleta, AHA senior associate director of policy, at (202) or rarchuleta@aha.org. May 29, American Hospital Association

2 May 29, 2014 INPATIENT REHABILITATION FACILITY PPS: PROPOSED RULE FOR FY 2015 BACKGROUND On May 7, the Centers for Medicare & Medicaid Services (CMS) published its fiscal year (FY) 2015 proposed rule for the inpatient rehabilitation facility (IRF) prospective payment system (PPS). In the rule, CMS proposes a net update of 2.2 percent, a $160 million increase over FY 2014 payment levels. As detailed below, this net increase takes into account a market basket update, reductions mandated by the Affordable Care Act (ACA) and payment increases for high-cost outliers, among other changes. The rule also would make changes to the IRF quality reporting program. FY 2015 PAYMENT UPDATE Market Basket Update The IRF PPS standard rate is updated annually using the rehabilitation, psychiatric and long-term care (RPL) market basket, which is calculated using data from only freestanding facilities. The proposed rule notes that CMS is developing a rehabilitationspecific market basket, which may be proposed for use in FY For FY 2015, the rule proposes a market basket update of 2.7 percent, which would be offset by a 0.4 percentage point cut for productivity and an additional 0.2 percentage point cut, as required by the ACA. The standard rate would be further adjusted by budget neutrality adjustments for changes to the wage index, labor-related share, relative weights of the case-mix groups, and the three facility adjustments, which would yield a FY 2015 IRF standard payment conversion factor of $15,185. Case-mix Group Relative Weights Each case is assigned to an IRF PPS case-mix group (CMG) based on the primary diagnosis and clinical severity of the patient. Each CMG is assigned a relative weight based on estimated resource use and has four tiers that reflect the number of comorbidities that are estimated to materially impact resource use. For FY 2015, the CMG relative weights would be updated in a budget-neutral manner using FY 2012 and 2013 claims and cost report data. Table 1 in the rule lists the proposed FY 2015 relative weights and average lengths of stays for each CMG and its comorbidity tiers. American Hospital Association 1

3 Labor-related Share The labor-related share is the national average proportion of total costs that are related to, influenced by or vary with the local labor market, such as wages, salaries and benefits. The proposed labor-related share for FY 2015 is percent a slight increase from the current labor-related share of percent. Area Wage Index CMS proposes to calculate the IRF PPS wage index for FY 2015 using the FY 2014 area wage indices from the inpatient PPS, without adjustments for geographic reclassification. The final FY 2014 wage index values for urban and rural IRFs are found on the CMS website. Scroll to the bottom of the page to download the files. For the FY 2015 inpatient PPS wage indices, CMS proposes to apply updated labor market boundaries based on new core-based statistical area (CBSA) definitions, which have been updated by the Office of Management and Budget (OMB) using 2010 census population data. CMS did not propose to update the IRF PPS with the revised wage index boundaries for FY 2015, but we anticipate that CMS will propose to do so in its FY 2016 rulemaking. Adjustment for High-cost Outliers CMS allocates 3 percent of total IRF payments for high-cost outlier payments. CMS estimates that 2.9 percent of this pool will be paid in FY Therefore, CMS proposes to slightly reduce the current high-cost outlier threshold of $9,272 to $9,149 for FY 2015 to utilize the entire pool. This change is estimated to increase total IRF payments by $5 million over FY 2014 levels. Facility-level Payment Adjustments CMS continues to be concerned about the reliability and accuracy of the IRF PPS s facility adjustments for rural, low-income percentage (LIP) and teaching IRFs. The proposed rule also notes the agency s ongoing concern about variation in costs between freestanding IRFs and IRF units in general acute-care hospitals and critical access hospitals (CAHs), and the negative impact of this difference on the accuracy of the facility adjustment factors. To enhance the precision of these facility adjustments, in FY 2014, CMS added a new control variable to the regression analysis it uses each year to update these adjustments. For FY 2015, CMS recommends a freeze of the facility-level adjustment factors at FY 2014 levels while it continues to monitor IRF claims data and assess the impact of the FY 2014 changes. The FY 2015 adjustment factors are shown below. Rural Adjustment: 14.9 percent; LIP Adjustment Factor: ; and Teaching Adjustment Factor: Consistent with prior practice, CMS proposes a budget-neutrality adjustment for each of these facility adjustments, which is applied after the budget-neutrality adjustments for the area wage index and the CMG relative weights. American Hospital Association 1

4 PROPOSED LIMITATIONS TO 60% RULE PRESUMPTIVE TEST There are two approaches for assessing IRF compliance with the 60% Rule. Most IRFs use the presumptive methodology, which is a software analysis by a CMS contractor that assesses ICD-9-CM diagnosis codes and impairment group codes (IGC) submitted for each patient. Only selected ICD-9-CM and IGC codes qualify under the presumptive test. IRFs that fail to demonstrate compliance using the presumptive test may elect, as a next step, a comprehensive assessment in which the contractor audits a sample of the facility s medical records to assess compliance with this policy. Reduction of ICD-9-CM Codes from Presumptive Test In the FY 2014 final rule, CMS finalized a policy to remove 259 ICD-9-CM codes from those that qualify under the 60% Rule presumptive test, beginning Oct. 1, CMS has stated that this change was intended to account for changes and variation over time in hospital coding, clinical practice, condition frequencies and 60% Rule enforcement by CMS contractors. The agency again notes in this proposed rule that patients with a deleted code may still be counted toward a facility s 60% Rule compliance percentage based on an audit of the medical record by a Medicare contractor. The timing of this change will not be affected by the delay in the rollout of new ICD-10-CM codes, which is discussed below. Proposed Removal of Amputation ICD-9-CM Codes from Presumptive Test The FY 2015 proposed rule would remove an additional 10 ICD-9-CM codes for amputation cases from the codes that qualify under the presumptive test beginning Oct. 1, CMS s rationale for this change is that these diagnosis codes (shown in Table 7 of the rule) cannot, on their own, indicate whether a patient with an amputation status or with prosthetic fitting and adjustment needs has a condition for which IRF treatment is medically necessary. Proposed Removal of IGCs from Presumptive Test IGCs are a unique set of codes specifically developed for the IRF PPS that indicate the primary medical reason for admission to an IRF, and are separate from ICD-9-CM codes. In this rule, CMS proposed to remove the following four IGCs beginning Oct. 1, 2014from those that qualify under the presumptive 60% Rule test: IGC Unilateral upper limb above the elbow; IGC Unilateral upper Limb below the elbow; IGC Rheumatoid arthritis; and IGC Other arthritis. Using the same rationale the agency cited when removing arthritis and other ICD-9-CM codes in the FY 2014 final rule, the proposed rule states that additional information beyond these IGCs is necessary to determine if the medical record would support counting these cases toward the 60% Rule. American Hospital Association 2

5 In addition, CMS would prohibit any IGC from qualifying under the presumptive test if the patient s etiologic diagnosis (the primary reason that led to the condition for which the patient is receiving rehabilitation) is excluded for that IGC. OTHER PROPOSED CHANGES New Reporting Requirement for Group Therapy The rule continues CMS s 2009 examination of how IRFs use group therapy and the relative value of group versus individual therapy. Based on comments received on this topic, CMS concludes that group therapy should not be the primary source of therapy for IRF patients and should instead be an adjunct to individual therapy services. The rule notes, however, that group therapy remains widely used today. CMS proposes that, beginning Oct. 1, 2015, IRFs be required to submit data via the IRF-patient assessment instrument on the minutes and mode of services provided by each therapy discipline physical, occupational and speech-language therapy. The proposed rule also defines the following three modes of therapy: Individual Therapy: Provided by one therapist or assistant to one patient. Group Therapy: Provided by one therapist or assistant to between two and six patients performing the same or different activities. Co-Treatment: Provided by more than one therapist or assistant from different therapy disciplines to one patient at the same time. CMS states that this new reporting would provide a deeper level of detail to aid in its examination of how group therapy is used in IRFs. ICD-10-CM CMS will release an interim final rule soon specifying the new ICD-10 compliance date of Oct. 1, The also rule will require Health Insurance Portability and Accountability Act-covered entities to continue to use ICD-9-CM through Sept. 30, ICD-10-CM implementation was to begin Oct. 1, 2014 but was delayed by the Protecting Access to Medicare Act. IRF QUALITY REPORTING PROGRAM The ACA mandates the establishment of a quality reporting program (QRP) for IRFs paid under the IRF PPS. Failure to meet the data submission requirements and deadlines of the program subjects IRFs to a 2 percent reduction to their annual market basket update, beginning in FY In this rule, CMS proposes two new measures for the FY 2017 IRF QRP, as well as several important changes to the program s data submission requirements. American Hospital Association 3

6 Proposed New Measures for FY 2017 CMS proposes to add two additional healthcare-associated infection (HAI) measures to the IRF QRP for FY 2017: Methicillin-resistant Staphylococcus aureus (MRSA) bacteremia; and Clostridium difficile (C Difficile) infection. Both measures are endorsed by the National Quality Forum (NQF), and have been reviewed by the Measure Applications Partnership (MAP). The ACA requires that measures for most CMS quality reporting and payment programs including the IRF QRP be reviewed by the multi-stakeholder MAP before they are proposed for programs. However, the MAP only conditionally supported these measures, citing concerns that the measures may not be ready for implementation in IRFs. CMS proposes to collect both measures using the Centers for Disease Control and Prevention s National Healthcare Safety Network (NHSN) submission tool. IRFs also are required to use NHSN to submit the healthcare personnel influenza vaccination and catheter-associated urinary tract infection (CAUTI) measures finalized for the IRF QRP in previous rulemaking. CMS proposes to use the same data collection timeframes and submission deadlines for the MRSA and C Difficile measures that it finalized for the CAUTI measure in FY CMS s finalized and proposed data collection and submission timeframes for HAI measures submitted via NHSN are outlined below. FY 2016 and 2017 Finalized and Proposed Data Collection and Submission Timeframes for IRF QRP Measures Reported Through NHSN Measure FY 2016 Data Collection FY 2016 Data Submission Deadline CAUTI Jan. 1, - Mar. 31, 2014 April 1 - Jun. 30, 2014 July 1 Sep. 30, 2014 Oct. 1 - Dec. 31, 2014 Aug. 15, 2014 Nov. 15, 2014 Feb. 15, 2015 May 15, 2015 FY 2017 Data Collection Jan. 1 - Mar. 31, 2015 April 1 - Jun. 30, 2015 July 1 - Sep. 30, 2015 Oct. 1 - Dec. 31, 2015 FY 2017 Submission Deadline Aug. 15, 2015 Nov. 15, 2015 Feb. 15, 2016 May 15, 2016 Health care provider influenza vaccination Oct. 1, 2014 Mar. 31, 2015 May 15, 2015 Oct. 1, 2015 Mar. 31, 2016 May 15, 2016 MRSA and C Difficile* N/A N/A Jan. 1 - Mar. 31, 2015* April 1 - Jun. 30, 2015* July 1 - Sep. 30, 2015* Oct. 1 - Dec. 31, 2015* Aug. 15, 2015* Nov. 15, 2015* Feb. 15, 2016* May 15, 2016* *Proposed American Hospital Association 4

7 Data Submission Requirements For the FY 2016 IRF QRP, CMS proposes to establish, for the first time, data completeness standards and a measure validation process. To date, CMS has only required that data be submitted by established deadlines. However, CMS has the authority to establish more specific submission requirements under the ACA, which requires IRFs to submit measure data in a form and manner, and at a time, specified by the Secretary [of Health and Human Services]. Thus, CMS proposes that IRFs that do not comply with all data submission requirements including the data completeness and validation requirements be subject to a 2 percent reduction to the annual payment update. The details of CMS s proposals are outlined below. Data Completeness. IRFs currently submit measure data using two mechanisms. Some measures are reported using the quality indicator section of the IRF-Patient Assessment Instrument (IRF-PAI) and submitted using CMS s Quality Improvement Evaluation System (QIES). In contrast, the HAI measures in the IRF QRP are submitted using the CDC s NHSN. Thus, for FY 2016, CMS proposes different data completeness thresholds for each measure submission mode: IRFs must submit IRF-PAI quality indicator data via the QIES that is at least 95 percent complete. IRFs must submit HAI measure data using NHSN that is 100 percent complete. CMS indicates that it did not propose a 100 percent data completeness threshold for IRF-PAI quality indicator data in order to provide a margin for error for circumstances that would make it difficult to submit complete data (e.g., patients discharged emergently or against medical advice). However, the agency states that it does not believe the collection of HAI measure data would be affected by such circumstances. CMS states that IRF-PAI quality indicator data will have met its proposed completeness threshold of 95 percent if an IRF s submitted IRF-PAI assessments contain 100 percent of the mandatory quality indicator data items. The quality data would be required to have actual patient data, and not a non-informative response, such as a dash (-). For the HAI measures submitted via NHSN, CMS proposes to require IRFs to complete all data fields required for measure numerator and denominator data. Measure Validation. Measure validation processes are used in other CMS quality reporting programs, such as the hospital inpatient quality reporting (IQR) program, to ensure that measure data have been accurately collected, thereby enhancing the accuracy of measure results. For FY 2016, CMS proposes to validate only the pressure ulcer measure collected using the IRF-PAI and, therefore, would use only the quality indicator items that inform the calculation of the measure. However, CMS states its intent to expand validation to other measures in future rulemaking. American Hospital Association 5

8 CMS proposes to perform validation on a random sample of 260 IRFs, and would randomly select five IRF-PAI assessments from each IRF in the validation group. CMS indicates that the actual validation process would be conducted on its behalf by a contractor. The contractor would send a written request to IRFs requesting copies of portions of the patient medical records corresponding to the randomly selected assessments. CMS indicates that the contractor may request information on admission and discharge assessments, nursing notes, physician admission and discharge summaries, and other information. CMS proposes that IRFs have 45 days to submit the requested information to the contractor. The contractor would then compare the data elements in the patient chart to the quality data submitted by the IRF to CMS, identifying any differences that would affect the measure rate. For example, the contractor would determine whether the patient record included information on worsened pressure ulcers that is not reflected in the data submitted to CMS. The contractor would then calculate a percentage of matching data elements, creating a validation score. CMS proposes that IRFs selected for validation must achieve at least a 75 percent validation score. CMS indicates that it would calculate a 95 percent confidence interval for the validation score that takes into account sampling error because it is not validating all records. The upper bound of that confidence interval must be at least 75 percent in order for IRFs to pass validation. CMS provides the following example in the proposed rule. Suppose there are nine data elements to be validated in the measure. Since each IRF subject to validation must submit five charts, an IRF s validation score would be based on 45 possible opportunities to report measure data correctly or incorrectly. If the IRF reported 40 out of 45 elements correctly, then its validation score would be 89 percent. CMS would then calculate a confidence interval that takes into account sampling error, which would be 96 percent. As a result, the IRF would successfully meet the validation requirements. Reconsiderations and Appeals Process. In the FY 2014 IRF PPS final rule, CMS finalized a voluntary reconsideration and appeals process for IRFs beginning with FY 2016 payments that allows IRFs to appeal findings of non-compliance with the IRF QRP. CMS proposes minor updates to this process for FY 2016, and indicates that the reconsideration process would take into account the proposed data completeness and validation requirements. Each year, the agency would notify in advance any IRFs found to be non-compliant with IRF QRP reporting requirements that they are potentially subject to a reduction in their annual payment update. These IRFs would be given an opportunity to file a reconsideration request with CMS. CMS could reverse its finding of non-compliance if the IRF provides sufficient evidence that it complied with the requirements, or has a justifiable reason why it could not comply. American Hospital Association 6

9 Other IRF QRP Issues Future Measurement Topics. CMS solicits comments on several specific quality measures and measurement topics it is considering for future use in the IRF QRP. Notably, the agency is considering the implementation of four functional status measures. In general, functional status measures assess the extent to which patients regain the ability to perform activities (or functions ) essential to daily living. The detailed specifications are available on CMS s website. The functional status measures assess whether IRF patients show improvement in two functional areas self-care (e.g., eating, bathing and oral hygiene), and mobility (e.g., ability to sit up, stand, walk, get into a car). IRFs would be expected to complete detailed assessments of each patient s self-care and mobility functions at the times of admission and discharge using the Continuity Assessment Record and Evaluation (CARE) tool, which was initially developed as part of the Post-Acute Care Reform Demonstration (PAC-PRD). The results of the admission and discharge assessments would be converted into functional status scores. The overall performance of IRFs would be reported in two ways. First, IRFs would receive improvement scores that reflect the difference in self-care and mobility function scores between admission and discharge. Second, the self-care and mobility functional status scores at the time of discharge would be reported. Both the improvement and discharge scores would be risk-adjusted to allow for national comparisons of IRF performance. The agency also solicits comment on the potential use of two measures designed for nursing homes. Both measures are NQF-endorsed for nursing home quality reporting, and the measure specifications are available on NQF s website. The links to the specifications are included below. Application of Percent of Residents Experiencing One or More Falls with Major Injury (Long-Stay) (NQF #0674) Application of Percent of Residents Who Self-Report Moderate to Severe Pain (Short-Stay) (NQF #0676) Public Reporting of IRF QRP Measures. CMS does not propose a process for publicly reporting the measures in the IRF QRP. However, the agency invites comment on what issues it should consider as it develops a public reporting process for the program. NEXT STEPS The AHA will host a member call on Thursday, June 5, at 3:00 p.m. ET to discuss the provisions of the proposed rule and to gather input from the field for AHA s comment letter to CMS. Invitations for this call were ed to AHA members. Please Camille Fernands at cfernands@aha.org with questions or to register. Related materials and a recording of this call will be available at: in the IRF section. American Hospital Association 7

10 Submitting Comments Electronically. The AHA urges all IRFs to submit comments. Comments are due to CMS by June 30 and may be submitted electronically at: Follow the instructions for Comment or Submission and enter the file code CMS-1608-P to submit comments on this proposed rule. Mailing Written Comments. You also may mail written comments (an original and two copies) to CMS. Via regular mail: Centers for Medicare & Medicaid Services Department of Health and Human Services Attention: CMS-1608-P P.O. Box 8016 Baltimore, MD Via overnight or express mail: Centers for Medicare & Medicaid Services Department of Health and Human Services Attention: CMS-1608-P Mailstop: C Security Boulevard Baltimore, MD Please contact Rochelle Archuleta, AHA senior associate director of policy, at (202) or with any feedback or questions on this proposed rule. American Hospital Association 8