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OVERVIEW OF LONG TERM CARE HOSPITALS AND INPATIENT REHABILITATION FACILITIES AND THEIR ROLE IN THE
POST ACUTE CARE CONTINUUM
I. INTRODUCTION
Government regulation of Medicare providers continues as a means to control costs and the delivery of care. As government seeks to promote “savings” throughout the post-acute payment world, the orbits of LTCHs, IRFs and SNFs continue to shrink, bringing these post acute care providers into competition for some of the same patient base and Medicare dollars, and providing other opportunities for them to work together. Understanding the issues facing LTCHs and IRFs, in addition to SNFs, will be important as providers and counsel navigate the post-acute challenges of today and tomorrow
II. LONG TERM CARE HOSPITALS A. Nature of Services Provided
1. LTCHs provide acute care services to medically complex patients requiring longer-term hospitalization.
2. Patients generally suffer from “medically complex” conditions and multiple concurrent illnesses, including pulmonary disease, cardiac disease, respiratory failure, pressure wounds, neuromuscular diseases, gastrointestinal diseases, post-operative complications and end stage renal disease requiring dialysis.
3. LTCHs provide a wide variety of interdisciplinary patient care services, including daily physician visits, nursing, respiratory therapy, physical, occupational and speech-language therapy, nutritional therapy, case management and social services, laboratory, radiology and pharmacy services, telemetry, dialysis, pain management, family interventions and end of life care.
B. Certification Requirements (42 U.S.C. § 1395(ccc))
1. LTCHs must meet Medicare’s Conditions of Participation for acute care hospitals – 42 CFR Part 482;
2. New hospitals are considered Acute Care Hospitals subject to IPPS reimbursement until the hospital demonstrates the ability to maintain an average length of stay (“ALOS”) of 25 days for five of a six month period; thereafter, a LTCH must have maintain an ALOS greater than 25 days for its Medicare patients for each cost reporting year;
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3. Prior to January 1, 2012, “Medicare patients” was defined as traditional Medicare for the 25 day ALOS calculation; currently CMS requires the inclusion of Medicare Managed Care patients in this calculation; and 4. Prior to the Medicare, Medicaid, and SCHIP Extension Act of 2007
(MMSEA) (P.L.110-173) (“MMSEA”), the only conditions for a LTCH-PPS Medicare payment were that a facility must:
a) have a provider agreement to participate as a hospital, and
b) have an average length of stay of 25 days or more for its Medicare patients.
5. In addition to the foregoing, MMSEA (codified at 42 U.S.C. § 1395(ccc)(4)) requires that LTCHs must also have:
a) A patient review process that
i) is documented in medical record,
ii) screens patients prior to admission for LTCH appropriateness,
iii) validates within 48 hours that patients meet LTCH admission criteria,
iv) regularly evaluates patients throughout their stay for continuation of LTCH care, and
v) assesses available discharge options when patients no longer meet continued stay criteria;
b) Active physician involvement with patients during their treatment through an organized medical staff, physician-directed treatment with physician on-site availability on a daily basis to review patient progress, and consulting physicians on call and capable of being at the patient's side within a moderate period of time; and
c) Interdisciplinary treatment teams for patients, requiring interdisciplinary teams of health care professionals, including physicians, to prepare and carry out an individualized treatment plan for each patient.
3 C. State Licensure
1. LTCHs are generally licensed by states as “acute care hospitals”
a) LTCHs however, are often exempted from any “emergency room” requirements under state licensure law.
2. There are a few states who have a special licensure category for LTCH.
D. Criteria for Admission
1. No formal criteria for admission exits for a medically complex patient to a LTCH. Each LTCH establishes its criteria for admission. Below are a sample of criteria developed within the industry.
2. Pre-Admission Screening Criteria: Specifies nine elements that should be included in a standardized preadmission screening process:
a) medical status of patient; b) planned level of improvement; c) expected length of stay;
d) evaluation of risk for clinical complications; e) primary and secondary diagnosis;
f) identification of the primary treatment needed by the patient; g) evaluation of whether there is appropriate treatment at a lower
level of care;
h) anticipated post-discharge settings and treatments; and i) any other clinical rationale for admission.
3. Admission Criteria
a) A physician must examine all patients during the first 24 hours of admission.
b) A patient meets LTCH admission criteria if he or she: i) Has 2 or more active secondary diagnoses;
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ii) Is reasonably expected to require hospital level of care, benefit from LTCH care, and require an extended stay in a hospital that is typical of LTCHs; and
iii) Is not admitted for the primary purpose of intensive therapy (i.e., therapy typically provided at an inpatient
rehabilitation facility).
E. Reimbursement Methodology
1. LTCH PPS – in place since October 1, 2002:
a) Long Term Care DRG patient classification system
i) Each patient stay grouped into LTC-DRG based on
diagnosis, procedures performed, age, gender and discharge status
ii) Each LTC-DRG has a predetermined ALOS
iii) Each LTC-DRG grouping reflects the typical resources used for treating patient within that grouping
b) Short Stay Outliers (SSO) (42 C.F.R. § 412.52)
i) A SSO is an adjustment to the Federal payment rate for LTCH stays that are considerably shorter than the expected ALOS for a MS-LTC-DRG.
ii) Cases qualify as a SSO when the ALOS is from one day and up to, and including, 5/6 of the ALOS for the MS-LTC-DRG to which the case is grouped.
iii) A length of stay that exceeds 5/6 of the ALOS for the MS-LTC-DRG for the case is considered to have exceeded the SSO threshold.
iv) When a case exceeds the SSO threshold, Medicare pays a full MS-LTC-DRG payment for that case.
v) For example, if the ALOS for a particular MS-LTC-DRG is 30 days, then the SSO policy applies to stays that are 25 days or less in length (i.e., 5/6 of 30 days = 25 days).
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vi) Medicare payment for SSOs is the least of one of the following calculation methods:
A. Full MS-LTC-DRG per diem amount;
B. 120% of the MS-LTC-DRG specific per diem amount multiplied by the covered LOS of the particular case;
C. 100% of the estimated cost of the case; and
D. Comparing the covered LOS for the SSO case and the IPPS comparable threshold, either:
1. A blend of 120% of the MS-LTC-DRG specific per diem amount and an amount comparable to the IPPS per diem amount, for cases where the covered LOS for the SSO case is greater than the IPPS comparable threshold;
2. An amount comparable to the IPPOS
comparable per diem amount, if the covered LOS for an SSO case is equal to or less than one standard deviation from the geographic average length of stay for the same MS-DRG under the IPPS (“IPPS comparable threshold”)
c) High Cost Outliers
i. An additional payment can be made for “high cost outliers” ii. Begins the day after accumulated covered charges reach the
“high cost outlier” threshold
iii. The “high cost outlier” threshold is equal to the LTC-DRG + a fixed loss amount
2. Medicare Benefit Days
a) 90 regular days (60 covered days + 30 coinsurance days),
renewable per benefit period
b) 60 Lifetime Reserve Days (not renewable)
i. If beneficiary doesn’t have enough regular benefit days to exceed the short stay outlier threshold, then he/she can use
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lifetime reserve days in order to exceed. (Allows full LTC- DRG to be paid).
ii. Once beneficiary begins to use lifetime reserve days, must
continue to use until discharged.
3. See CMS Publication, 100-04, Medicare Claims Processing Manual, Chapter 3, Section 150 for LTCH PPS issues.
F. Types of LTCHs 1. Freestanding
2. Hospital within Hospital
a) A HWH is defined as a hospital. 42 CFR § 412.22(e). In order to qualify as a HWH, the following requirements must be met:
i) Separate Governing Body. The HWH must have a separate governing body from the host hospital, that is not under the "control" of the host hospital, or any third entity that controls both hospitals. "Control" exists if an individual or organization has the power, directly or indirectly,
significantly to influence or direct the actions or policies of an organization or institution. 42 CFR § 412.22(g).
Common ownership of the host hospital and the HWH is permitted and does not, if appropriately structured, automatically result in prohibited "control."
ii) Separate Chief Medical Officer. The HWH must have a Chief Medical Officer that reports directly to the HWH governing body. The HWH Chief Medical Officer cannot be employed by or under control of either the host hospital or any third entity that controls both hospitals.
iii) Separate Medical Staff. The HWH medical staff must be separate from the host hospital staff. The HWH staff must report directly to the HWH governing body, and must develop its own bylaws.
iv) Separate Chief Executive Officer. The HWH must have a Chief Executive Officer that reports directly to the HWH governing body. The HWH Chief Executive Officer cannot be employed by or under control of either the host hospital or any third entity that controls both hospitals.
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v) Operational Tests. For non-LTCH HWH's, one of the three tests below must be met:
(A) Basic Functions. The HWH performs the basic functions specified in 42 CFR 482.21 through 482.27, 482.30 and 482.42 (the Medicare
Conditions of Participation for Hospitals) through the use of its own employees or under contract with entities other than the host hospital or a third entity that controls both hospitals. This essentially means that quality assurance, medical staff, nursing services, medical record services, pharmacy services, radiology, laboratory, utilization review, infection control, discharge planning services must be provided by the HWH or through contract with a non-host hospital entity. Note, however, that the HWH may purchase food and diabetic services, housekeeping, and maintenance services from the host hospital.
(B) Fifteen percent (15%) of total inpatient cost. For the same period used to determine compliance with the regulation for its specific hospital type (here,
rehabilitation hospitals), the cost of services that the HWH purchases from the host hospital or from a third entity that controls both hospitals is no more than 15% of the HWH's total inpatient operating costs.
(C) Seventy five percent (75%) patient population. For the same period used to determine compliance with the regulation for its specific hospital type (here, rehabilitation hospitals), the HWH has an inpatient population of whom at least 75% were referred to the HWH from sources other than the host hospital. While the Operational Tests above have been eliminated with respect to LTCH's (and replaced with the payment limitation regulations further discussed below), these requirements remain in place for rehabilitation and psychiatric HWH's and their satellites.
b) Assuming satisfaction of the HWH requirements, the following would also apply:
i) Notification of Co-Located Status. The HWH must notify its Fiscal Intermediary/Medicare Contractor and CMS of its
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co-located status within 60 days of its first cost reporting period. The notice must also include the name, address and Medicare provider number of the host hospital. See 42 CFR § 412.532.
ii) Five Percent (5%) Rule. Under this Rule, 42 CFR
413.40(a)(3), and a separate 5% Rule, 42 CFR 412.532, the HWH cannot readmit more than 5% of its Medicare
patients transferred from the HWH to the host hospital without suffering payment limitations.
iii) Twenty-Five Percent (25%) Rule. Under this Rule, 42 CFR 412.534, the HWH's payments will be reduced if 25% of its patients are admitted from the host hospital. Currently, due to phase in, this percentage is set at 50%. 3. Satellites and Remote Locations
a) 42 CFR § 412.22(h) defines a satellite as a "part of a hospital that provides inpatient services in a building also used by another hospital, or in one or more entire buildings located on the same campus as buildings used by another hospital." To be considered a "satellite" for Medicare certification purposes, the satellite must: (i) Independently meet the LTCH requirements;
(ii) Maintain admission and discharge records separately from the host hospital;
(iii) Have its beds physically separate from the host/other hospital;
(iv) Have the same Fiscal Intermediary as its main hospital; (v) Be treated as a separate cost center of its main hospital; (vi) Use an accounting system that properly allocates costs; and (vii) Report its costs on the cost report of the main hospital. b) 42 CFR 413.65(a)(2) defines a remote location of a hospital as “a
facility or organization that is either created by, or acquired by, a hospital that is a main provider for the purpose of furnishing inpatient hospital services under the name, ownership, and financial control of the main provider” and includes both the physical facility as well as the personnel and equipment needed to deliver services at that facility.
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c) In addition, in order to be considered a "provider based hospital satellite or remote location," the provisions of 42 CFR § 413.65 must also be satisfied. Subsections (d) and (e) contain most of the specific limitations (including the familiar 35-mile requirement). As you'll note, in order to obtain "provider-based" status, the following must occur:
i) The main hospital and the satellite/remote location must be operated under the same license;
ii) The clinical services of the main hospital and the
satellite/remote location must be integrated, as outlined in
Section (d)(2).
iii) The financial operations of the main hospital and the satellite/remote location must be integrated, as outlined in
Section (d)(3).
iv) The main hospital and the satellite/remote location are held out to the public as integrated entities.
v) The main hospital and the satellite/remote location must be under the same ownership and control, as reflected in
Section (e)(1).
vi) The satellite/remote location must be under the administrative supervision and control of the main provider, as reflected in Section (e)(2).
vii) The satellite facility/remote location must be within 35 miles of the main provider, per Section (e)(3)
III. INPATIENT REHABILITATION FACILITIES/REHABILITATION HOSPITALS A. Nature of Services Provided
1. IRFs provide rehabilitation therapy in a resource intensive inpatient hospital environment for patients who, due to the complexity of their nursing, medical management, and rehabilitation needs, require and can reasonably be expected to benefit from an inpatient stay and an
interdisciplinary team approach to the delivery of rehabilitation care.
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B. Certification Requirements (42 C.F.R. § 412.23(b) An IRF must meet the following requirements:
1. Have a provider agreement to participate as a hospital;
2. Currently, at least 60% of a facility’s total inpatient population must meet at least one of 13 medical conditions (see Section III(D)(7) below); 3. Have in effect a preadmission screening procedure under which each
prospective patient’s condition and medical history are reviewed to determine whether the patient is likely to benefit significantly from an intensive inpatient hospital program;
4. Have in effect a procedure to ensure that patients receive close medical supervision;
5. Furnish rehabilitation nursing, physical therapy, and occupational therapy, plus, as needed, speech-language pathology, social services, psychological services, and orthotic and prosthetic services;
6. Have a rehabilitation director who
a) Provides services to the hospital and its patients on a full-time basis;
b) Is an M.D. or D.O.;
c) Is licensed under state law to practice medicine or surgery; and d) Has at least 2 years of training or experience in the
medical-management of inpatients requiring rehab services.
7. Has a plan of treatment for each inpatient that is established, reviewed and revised by a physician in consultation with other professional personnel; and
8. Use a coordinated interdisciplinary team approach in the rehabilitation of each inpatient.
Unlike a LTCH, an IRF can be immediately classified as a Rehabilitation Hospital without a “demonstration period”.
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C. Criteria for Admission (42 C.F.R. § 412.622(a)(3))
1. For an IRF claim to be considered reasonable and necessary, there must be a reasonable expectation that the patient meets all of the following
requirements at the time of admission:
a) Requires the active and ongoing therapeutic intervention of multiple therapy disciplines;
b) Generally requires and can reasonably be expected to actively participate in, and benefit from an intensive rehabilitation therapy program, which generally consists of at least 3 hours of therapy per day at least 5 days per week;
c) Is sufficiently stable at the time of admission to be able to actively participate in the intensive rehabilitation therapy program as described above; and
d) Requires physician supervision by a rehabilitation physician. This requirement means that the rehabilitation physician must conduct face-to-face visits with the patient at least 3 days per week throughout the patient’s stay.
See Section IV(F) for additional requirements of a claim to be considered “reasonable and necessary”.
D. Reimbursement Methodology
1. Balanced Budget Act modified how payment is made for IRF services, authorizing the implementation of a per-discharge PPS for IRFs. 2. The IRF PPS payment for each patient is based on information found in
the IRF patient assessment instrument (PAI).
3. The IRF PAI contains patient clinical, demographic, and other
information, and classifies the patient into distinct groups based on clinical characteristics and expected resource needs.
4. Separate payments are calculated for each group, including the application of case and facility level adjustments.
5. IRF PPS includes the following elements: a) Rates;
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b) IRF classification criteria (see Section IV(E) for additional discussion); and
c) Reasonable and necessary criteria (discussed below in Section IV(F))
6. Rates (42 CFR Section 412.622)
Under IRF-PPS, IRF’s receive a per-discharge payment, intended to cover all costs of furnishing IRF services (routine, ancillary, and capital related) other than costs associated with operating approved educational activities, bad debts, and other costs not covered under the PPS. A patient is
generally required to need and receive 3 hours per day of either physical therapy (PT) or occupational therapy (OT). Federal rates are adjusted to reflect:
a) Patient case mix, which is the relative resource intensity that would typically be associated with each patient’s clinical condition as identified through the resident assessment process:
i) Cases are grouped into Rehabilitation Impairment
Categories, according to the primary condition for which the patient was admitted to the rehabilitation hospital; ii) Cases are further grouped into case-mix groups (CMG),
which group cases that are similar according to their functional motor and cognitive scores and age;
iii) Finally, cases are grouped into one of four tiers within each CMG, according to patients’ comorbidities (conditions that are secondary to the principal diagnosis or reason for the inpatient stay). Each tier adds a successively higher payment amount to the case depending on whether the costs of the comorbidity are significantly higher than other cases in the same CMG (low, medium, or high); and iv) Additional adjustments are made for interrupted stays, short
stays of less than three days, short-stay transfers (defined as transfers to another institutional setting with an IRF length of stay less than the average length of stay for the CMG), and high-cost outlier cases; and
b) Facility characteristics:
i) Rates are adjusted to reflect geographic differences in wage rates, using the hospital wage index;
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ii) IRFs in rural areas (non-Metropolitan Statistical Areas) receive an increase to their rates;
iii) IRFs receive an increase to their rates depending on the proportion of low-income patients they treat; and
iv) IRFs with residency training programs receive an increase to their rates that is based on the number of interns and residents they train compared with their average daily census. This adjustment is subject to a cap.
c) Federal rates are updated annually:
i) To reflect inflation in the cost of goods and services used to produce IRF services;
ii) To reflect changes in local wage rates, using the hospital wage index; and
iii) Through rulemaking that, by law (Section 1886(j) of the Social Security Act), must be provided for publication in the “Federal Register” on or before the August 1 that precedes the October 1 start of each new Federal fiscal year (FY).
7. Classification criteria (42 C.F.R. § 412.29(b)(2))
60% of a facility’s total inpatient population must meet at least one of 13 medical conditions:
a) Stroke;
b) Spinal cord injury; c) Congenital deformity; d) Amputation;
e) Major multiple trauma;
f) Fracture of femur (hip fracture); g) Brain injury;
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h) Neurological disorders, including multiple sclerosis, motor neuron diseases, polyneuropathy, muscular dystrophy, and Parkinson’s disease;
i) Burns;
j) Active polyarticular rheumatoid arthritis, psoriatic arthritis, and seronegative arthropathies resulting in significant functional impairment of ambulation and other activities of daily living; (A) Requires evidence that other less intensive treatments have
been attempted before admission to the IRF
k) Systemic vasculidities with joint inflammation resulting in significant functional impairment of ambulation and other activities of daily living;
(A) Requires evidence that other less intensive treatments have been attempted before admission to the IRF
l) Severe or advanced osteoarthritis (osteoarthrosis or degenerative joint disease) involving two or more weight bearing joints (elbow, shoulders, hips, or knees but not counting a joint with a prosthesis) with joint deformity and substantial loss of range of motion,
atrophy of muscles surrounding the joint, and significant functional impairment of ambulation and other activities of daily living. (A) Requires evidence that other less intensive treatments have
been attempted before admission to the IRF
m) Knee or hip joint replacement, or both, during an acute care hospitalization immediately preceding the inpatient rehabilitation stay and also meets one or more of the following specific criteria: (A) The patient underwent bilateral knee or bilateral hip joint
replacement surgery during the acute care hospital admission immediately preceding the IRF admission; (B) The patient is extremely obese with a Body Mass Index of
at least 50 at the time of admission to the IRF; or
(C) The patient is age 85 or older at the time of admission to the IRF.
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IV. CURRENT AND FUTURE ISSUES FOR LTCHs AND IRFs
A. 25 Day Average Length of Stay Requirement (LTCH) (42 C.F.R. § 412.23(e)(3)) 1. ALOS is calculated by dividing the total number of covered and
noncovered days of stay of Medicare inpatients (less leave or pass days) by the number of total Medicare discharges for the hospital's most recent complete cost reporting period. As of January 1, 2012, CMS requires the inclusion of Medicare Managed Care patients in this calculation.
2. In calculating the ALOS, if the days of a stay of an inpatient involves days of care furnished during two or more separate consecutive cost reporting periods, that is, an admission during one cost reporting period and a discharge during a future consecutive cost reporting period, the total number of days of the stay are considered to have occurred in the cost reporting period during which the inpatient was discharged.
3. Calculation of ALOS in CHOW situations: a) 42 C.F.R. 412.23(e)(3)(iv) states:
“If a hospital has undergone a change of ownership at the start of a cost reporting period or at any time within the period of at least 5 of the preceding 6 month period the hospital may be excluded from the prospective payment system as a long term care hospital for a cost reporting period if for the period of at least 5 months of the 6 months immediately preceding the start of the period (including time before the change of ownership) the hospital had the required average length of stay.”
b) Despite the literal language, CMS focuses on the 5 months immediately preceding the CHOW.
c) If that 5 month period does not have qualifying ALOS, LTCH status is being retroactively terminated back to the date of the
CHOW without any opportunity for the alternative mandated by
the rule.
d) This contradicts past practice of CMS, where providers that did not have at least 5 months of qualifying ALOS immediately prior to the CHOW date were allowed to submit data for the period of at least 5 of the 6 months immediately preceding the cost reporting period selected by the Buyer.
16 B. “25% Rule” (LTCH) - 42 CFR § 412.534
1. Special payment adjustment policy.
2. Originally applied to LTCH Hospitals within Hospitals (HWH) and satellites of an LTCH that is co-located.
3. The rule: if more than 25 percent of an LTCH HWH’s, or an LTCH satellite’s discharges for a cost report period were admitted from its co-located host hospital, the payment to the LTCH for that cost report period is adjusted for all discharges exceeding the 25% threshold. The net
payment amount to the LTCH for such discharges is based on the lesser of a payment based on the Medicare Severity Long-Term Care Diagnosis-Related Groups (MS-LTC-DRGs) or an amount equivalent to what Medicare would otherwise have paid under the IPPS.
4. FY 2007 LTCH Prospective Payment System (PPS) Final Rule expanded the 25% rule to all LTCHs (including free-standing and grandfathered co-located LTCHs) admitting patients from any hospital with which the LTCH or LTCH satellite was not co-located.
5. MMSEA, amended by the American Recovery and Reinvestment Act of 2009 (ARRA) and the ACA, exempts “freestanding” LTCHs and
“grandfathered” HWHs from the percentage thresholds for five years. In other words, the Secretary of HHS is prohibited from applying the 25% rule to freestanding LTCHs (and certain HWHs) before cost reporting periods beginning July 1, 2012.
6. In the FY 2013 IPPS/LTCH PPS final rule, CMS extended the current 25% rule relief period for an additional one-year period, effective with cost reporting periods beginning on or after October 1, 2012 and before October 1, 2013.
7. After the sunsetting of the 25% rule relief period, the 25% threshold will be fully phased-in over three years, starting at 75% for the first cost reporting year, then 50% for the next year, then 25% for the next year and all subsequent years.
C. Development of LTCH Quality Measures
1. The Affordable Care Act (ACA) directed the Secretary to establish quality reporting requirements for LTCHs
2. Reporting of quality measures for LTCHs to begin no later than fiscal year 2014
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3. LTCHs are required to submit data on the following indicators: a) Urinary catheter-associated urinary tract infections (CAUTI)
events on all patients;
b) Percent of Medicare patients with new or worsened pressure ulcers since admission;
c) Central line-associated blood stream infections
4. Failure to report quality measures will result in a 2% reduction to an LTCH's annual market basket update
5. IRFs are required to report on CAUTI events and pressure ulcers and are subject to the same 2% reduction
D. LTCH Moratorium (42 C.F.R. § 412.23(e)(6))
1. MMSEA imposed a 3-year limited moratorium (until Dec. 28, 2010) on new LTCHs and new beds in existing LTCHs
a) No new LTCHs unless
i) LTCH began its qualification for payment as an LTCH on or before Dec. 29, 2007;
ii) As of Dec. 29, 2007, the LTCH had a binding written agreement with an outside, unrelated party for the actual construction, renovation or demolition of an LTCH, and has expended, before Dec. 29, 2007, the lesser of 10% of the estimated cost of the project or $2.5 million; or iii) LTCH obtained a CON from the state (if required) on or
before Dec. 29, 2007
b) No new beds unless the LTCH or LTCH satellite is located in a state where there is only one other LTCH and the request for an increase in bed size follows the closure or decrease of beds of another LTCH in the state.
2. ACA extended the moratorium for two years – Dec. 28, 2012.
3. CMS recently announced that moratorium would expire as of December 29, 2012 and moratorium has sunset.
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4. However, CMS has authority under the ACA to impose an administrative moratorium on the enrollment of new Medicare providers and suppliers of a specific type in a particular geographic area.
E. 75/25 Rule (IRF) (42 C.F.R. § 412.29(b)(1))
1. One criterion that Medicare uses for classifying a hospital or unit of a hospital as an IRF is that a minimum percentage of a facility’s total
inpatient population must meet at least one of 13 medical conditions listed above in Section III(D).
2. This minimum percentage is known as the compliance threshold. 3. “75% Rule”: the compliance threshold was 75% prior to CMS issuing a
final rule on May 7, 2004, which revised the classification criteria.
4. Beginning July 1, 2006, MMSEA stipulated that the compliance threshold should be set no higher than 60%.
5. FI calculates the compliance percentage using one of two methods: a) The presumptive method: using a CMS software program that
analyzes the IRF PPS impairment group, etiologic, or comorbidity ICD-9-CM codes on the IRF PAIs that the provider submitted to CMS during a specific compliance review time period;
b) A review of medical records: analyzing a random sample of medical records that represent inpatients the IRF treated during the compliance review time period.
6. Even if FI determines that the provider met the compliance threshold by using the presumptive method, it still has the discretion to also use a random sample of medical records to calculate a compliance percentage. 7. A compliance percentage calculated by analyzing a random sample of
medical records will always supersede a compliance percentage calculated by using the presumptive method.
8. FI must use the random sample medical record method to calculate the compliance percentage when the compliance percentage using the presumptive method fails to meet the applicable compliance threshold.
19 F. Conditions of Payment (IRF)
1. IRF Coverage Criteria (42 C.F.R. § 412.622(a)(3))
For an IRF claim to be considered reasonable and necessary, there must be a reasonable expectation that the patient meets all of the following
requirements at the time of admission:
a) Requires the active and ongoing therapeutic intervention of multiple therapy disciplines;
b) Generally requires and can reasonably be expected to actively participate in, and benefit from an intensive rehabilitation therapy program, which generally consists of at least 3 hours of therapy per day at least 5 days per week;
c) Is sufficiently stable at the time of admission to be able to actively participate in the intensive rehabilitation therapy program as described above; and
d) Requires physician supervision by a rehabilitation physician. This requirement means that the rehabilitation physician must conduct face-to-face visits with the patient at least 3 days per week throughout the patient’s stay.
2. Documentation (42 C.F.R. § 412.622(a)(4))
To demonstrate that the patient meets the IRF coverage requirements outlined above, the patient’s medical record must contain:
a) A comprehensive preadmission screening that
i) Is conducted by a licensed or certified clinician designated by a rehab physician within 48 hours of admission;
ii) Contains a detailed and comprehensive review of the patient’s condition and medical history;
iii) Serves as a basis for the initial determination of whether or not the patient meets the requirements for an IRF admission to be considered reasonable and necessary;
iv) Is used to inform a rehab physician who reviews and documents his/her concurrence with the findings and results of the preadmission screening; and
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v) Is retained in the patient’s medical record. b) A post-admission physician evaluation that
i) Is completed by a rehab physician within 24 hours of admission;
ii) Documents the patient’s status on admission, includes a comparison with the information noted in the preadmission screening, and serves as the basis for the development of the overall plan of care; and
iii) Is retained in the patient’s medical record. c) An individualized overall plan of care that
i) Is developed by the rehab physician with input from the interdisciplinary team within 4 days of the patient’s admission; and
ii) Is retained in the patient’s medical record.
3. Interdisciplinary Team Approach to Care (42 C.F.R. § 412.622(a)(5)) For an IRF claim to be considered reasonable and necessary, the patient must require an interdisciplinary team approach to care, which is
evidenced by documentation in the patient’s medical record of weekly interdisciplinary team meetings that meet all of the following
requirements:
a) Team meetings led by the rehab physician and attended by a registered nurse with specialized training or experience in rehabilitation, a social worker or case manager, and a licensed or certified therapist in each therapy discipline involved in treating the patient;
b) Team meetings occur at least once per week through the duration of the patient’s stay; and
c) The results and findings of the team meetings, and the rehab physician’s concurrence with those results and findings, are retained in the patient’s medical record.
21 G. Compliance Issues
1. Interrupted Stay Payments
a) LTCH patient is discharged from an LTCH for treatment and services not available from the LTCH and readmitted after a specific number of days to the same LTCH for further medical treatment
b) Two Types
i) Greater than 3-day interruption of stay: LTCH patient is discharged to a specific type of Medicare provider, such as an acute care hospital, IRF or SNF. To qualify, patient must also be:
Discharged directly from LTCH and admitted directly to the acute care hospital, IRF or SNF; and Discharged back to the original LTCH after a LOS
that falls within the applicable fixed-day period: o Acute care hospital: between 4 and 9 days o IRF: between 4 and 27 days
o SNF: between 4 and 45 days ii) 3-day or less interruption of stay: LTCH Patient is
discharged and readmitted to the LTCH within 3 days, regardless of where the patient goes upon discharge c) Counting days
i) The interrupted stay day count begins on the day of
discharge from the LTCH and continues until the 9th, 27th, or 45th day after discharge (depending on the facility type). ii) Though the “greater than three-day interruption of stay”
policy governs from the fourth day forward, the day count of the interruption begins on the first day that the patient is away from the LTCH.
iii) If an interruption in the patient’s stay at an LTCH meets the interrupted stay criteria, the days prior to the original discharge from the LTCH will be added to the number of days following the readmission at the receiving Medicare provider.
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iv) The days before and after an interrupted stay determine the total LOS for the episode of care.
d) If a stay falls within either definition, Medicare will pay only one MS-LTC-DRG payment (or adjusted SSO payment, if applicable) to the LTCH.
2. Physician Contracting Issues a) Stark Law Compliance
i) Personal Services Exception
ii) Recruitment Issues
iii) Incentive Compensation Issues b) Medical Staff Issues
c) Employee/Independent Contractor Issues
i) IRF Rehab Director must provide services on a full-time basis and, in the case of a rehab unit, devote at least 20
hours per week
ii) Does this make the Rehab Director an employee under IRS rules?
iii) How does this square with state requirements prohibiting the employment of physicians by hospitals?
3. Medical Necessity Issues - Admissions to LTCH
a) Determination that a patient’s admission to a LTCH is medically necessary.
b) Management of the 25 day ALOS by a LTCH in admitting lower acuity patients who are eligible for LTCH services.
H. Transaction/CHOW Issues
1. Significant reporting obligations at both federal and state levels
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2. First, need to determine how the applicable regulatory agency will view the transaction – CHOW, change of management, change of information, etc.
a) CHOW for Medicare purposes (see 42 C.F.R. § 489.18 and State Operations Manual (Pub. 100-07), Chapter 3, §§ 3210-3210.5.C.) if
i) Asset sale or transfer; OR ii) Corporation
Merger
o Merger of provider into another organization = CHOW
o If provider is surviving entity = not a CHOW
Transfer of stock = not a CHOW iii) Partnership
Generally, change in partners = CHOW
Up to the provider to convince Medicare that State law would allow the parties to change partners without "dissolving" the existing partnership and creating a new partnership.
iv) Does the Tax ID No. change?
b) Changes in management that trigger reporting obligations c) Changes of information (e.g., change in officers, indirect
ownership, administrator, name, etc.) 3. Second, provide appropriate notice
a) Form CMS 855 b) Timing
i) CHOW –prior to closing to ensure assignment of Medicare number is approved
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ii) Change of management – within 90 days of change iii) Change of information – within 90 days of change
But within 30 days for a change of control that does not rise to a CHOW
V. RELATIONSHIPS BETWEEN LTCHS, IRFS AND SNFS IN THE POST ACUTE MARKETPLACE
A. Post Acute Marketplace
1. The post-acute continuum of services is provided by multiple provider types, each with their own payment system:
a) Long Term Care Hospitals
b) Nursing Facilities (SNF, NF & hospital-based)
c) Inpatient Rehabilitation Hospitals
d) Home Health Agencies
e) Hospices
2. Patients cared for within the post-acute continuum often transition between multiple providers as their care needs change.
3. As CMS continues to move toward removing “silos” of payment systems, and forcing a “bundling” package of services, providers within the long term care continuum will be pushed to more cooperative arrangements and, potentially, competition for patients in order to remain in operation. 4. Continuing Care Hospital Concept – including a LTCH, IRF and SNF on
the same campus or building; regulatory and licensure barriers that would need to be changed.
B. Acute – Post Acute Relationships
1, Relationships are driven by local market. If an ACO is being formed, need to become post acute provider for the ACO. If no ACO, review ability to form a joint venture or other affiliation with the predominant healthcare system in the market. Review opportunities to partner with other post acute providers in the market.
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2. Legal checklist for Acute – Post Acute Affiliations:
a. Structuring the Referral Process and Preserving Patient Choice b. Addressing Anti-Kickback, Fraud and Abuse and Stark Law
Considerations
c. Affiliated Provider Legal Status d. Severability of the Affiliation e. Payment Reform Implications f. Regulatory Issues
C. Managed Care Organizations Relationships
1. Alignment with managed care organizations to be the provider of post-acute services.
2. Provide payor source with quality outcomes compared with other alternatives.
D. Physician Relationships
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