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CMS Responds to OIG Review of Rehab Facilities

James Carroll, for HealthLeaders Media, August 18, 2010

Inpatient rehabilitation facilities (IRF) were the recent target of two OIG reviews. While the reports on the reviews contain information pertinent to IRFs, the official Centers for Medicare & Medicaid Services (CMS) response to the findings is notable to many different types of providers.

The first report, a nationwide review of IRF transmission of patient assessment instruments for calendar years (CY) 2006 and 2007, showed that IRFs didn't always submit required patient assessment data in timely fashion, which would trigger a reduction in the case-mix group payment, according to Nancy J. Beckley, MS, MBA, CHC, president of Nancy Beckley & Associates LLC in Milwaukee, WI.

Included in the audit were 10,338 claims (worth $166 million in payments) that were at high risk for overpayment because the assessment data was transmitted to the National Assessment Collection Database after the allowed 27-day deadline. Based upon these findings, CMS concluded that fiscal intermediaries (FI) made overpayments of $20.2 million to IRFs in CY 2006 and 2007.

In addition, FIs may have made an additional $19 million in overpayments due to lack of clarity in the regulations regarding data for claims originally submitted within the 27-day time frame, but later resubmitted to correct errors outside of the 27-days allowed, according to CMS.

The second report reviewed IRF compliance with Medicare's transfer regulation during fiscal years (FY) 2004–2007. If a patient is discharged to home, Medicare pays the full prospective payment to an IRF. However, Medicare pays a lesser amount for a transferred patient, according to Beckley. In this particular case, the issue was whether the proper status codes were used on IRF claims.

Based upon the sampling of 220 claims, the review determined that 213 claims were improperly coded as discharges resulting in overpayment of $1.2 million. CMS concluded that FIs were overpaid $34 million for the four-year period ending September 30, 2007.

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