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MIR-2006-11AB, November 2006
MLN Matters. . .Information for Medicare Providers
(Issued by the Centers for Medicare & Medicaid Services)
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Inpatient Rehabilitation Facility (IRF) Annual Update: Prospective Payment System (PPS) Pricer Changes for FY 2007
Provider Types Affected
Providers submitting claims to Medicare fiscal intermediaries (FIs) for IRF PPS services provided to Medicare beneficiaries
Provider Action Needed
Impact to You
This article is based on Change Request (CR) 5273, which provides details about the changes that will be required as part of the annual IRF PPS update for Fiscal Year (FY) 2007, and it highlights several of the major refinements from the FY 2007 IRF PPS Final Rule.
What You Need to Know
Updated rates are effective for claims with discharges that fall on or after October 1, 2006, and on or before September 30, 2007.
What You Need to Do
See the Background section of this article for further details regarding this IRF annual update.
Background
On August 7, 2001, the Centers for Medicare & Medicaid Services (CMS) published a Final Rule in the Federal Register (http://www.access.gpo.gov/su_docs/fedreg/a010807c.html  ) that established the Prospective Payment System (PPS) for Inpatient Rehabilitation Facilities (IRFs) as authorized under the Social Security Act (Section1886(j)). In that final rule, CMS set forth per discharge federal rates for federal fiscal year (FY) 2002. These IRF PPS payment rates became effective for cost reporting periods beginning on or after January 1, 2002, and annual updates to the IRF PPS rates are required by the Social Security Act (Section 1886(j)(3)(C)).
On August 18, 2006, CMS published the FY 2007 IRF PPS Final Rule in the Federal Register (http://www.access.gpo.gov/su_docs/fedreg/a060818c.html ), which provides the prospective payment rates applicable for IRFs for FY 2007.
A new IRF Pricer software package will be released prior to October 1, 2006 that will contain the updated rates that are effective for claims with discharges that fall on or after October 1, 2006 through September 30, 2007. Your FI will install the new revised Pricer program in a timely fashion to ensure you receive accurate payments for IRF PPS claims with discharges occurring on or after October 1, 2006 through September 30, 2007.
Pricer Updates: For IRF PPS FY 2007 (October 1, 2006 – September 30, 2007)
Standard federal rate |
$12,981 |
Fixed loss amount |
$5,534 |
Labor-related share |
75.612% |
Non-labor-related share |
24.388% |
Urban national average CCR |
0.484 |
Rural national average CCR |
0.600 |
Hold Harmless
There were 32 IRFs identified in FY 2006 that received a hold harmless adjustment of as much as 12.76 percent. For FY 2007, these same 32 providers (See IRF PPS Final Rule Data Files at http://www.cms.hhs.gov/InpatientRehabFacPPS/07_DataFiles.asp ) will get a hold harmless adjustment of as much as 6.38 percent.
One of the 32 IRFs above (49T005) qualifies for the hold harmless policy, but would experience higher payments with the second year of the hold harmless adjustment of 6.38 percent than they would have experienced had they been paid under their rural designation in FY 2006, including the FY 2005 rural adjustment of 19.14 percent. Thus, this facility will receive a special wage index value to reduce the amount of its hold harmless adjustment. In other words, CMS is capping this facility’s payments under the hold harmless policy at what this facility would have been paid under their rural designation in FY 2006, including the FY 2005 rural adjustment of 19.14 percent. CMS will provide FIs with the applicable special wage index value for this IRF (and for any other IRFs CMS may later discover would receive higher payments as a result of the hold harmless policy). This special wage index value will be used instead of the FY 2007 CBSA wage index value for determining FY 2007 IRF PPS payments for this IRF.
Implementation
The implementation date for CR5273 is October 2, 2006.
Additional Information
For complete details, please see the official instruction issued to your intermediary regarding this change. That instruction may be viewed at http://www.cms.hhs.gov/Transmittals/downloads/R1053CP.pdf  on the CMS Web site.
If you have any questions, please contact your intermediary at their toll-free number, which may be found on the CMS Web site at http://www.cms.hhs.gov/MLNProducts/downloads/CallCenterTollNumDirectory.zip  .
Disclaimer
This article was prepared as a service to the public and is not intended to grant rights or impose obligations. This article may contain references or links to statutes, regulations, or other policy materials. The information provided is only intended to be a general summary. It is not intended to take the place of either the written law or regulations. We encourage readers to review the specific statutes, regulations and other interpretive materials for a full and accurate statement of their contents.
MLN Matters Number: MM5273
Pub. 100-4, Transmittal# R1053CP, CR# 5273
Related CR Release Date: September 8, 2006
Effective Date: October 1, 2006
Implementation Date: October 2, 2006
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