CMS Responds to OIG Review of Rehab Facilities

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.

Of particular note to providers in this report is the CMS response. CMS administrator and Chief Executive Officer Marilyn Tavenner indicated that CMS will share the OIG audit information with the RACs and "encourage them to consider these findings as they decide what claims to review," according to Beckley.

Another item of which IRFs should take notice is the sampling period used by the OIG in the transfer regulation review from FY 2004---2007, according to Tanja Twist, MBA/HCM, director of patient financial services at Methodist Hospital of Southern CA in Arcadia. "In her May 13 response to the OIG's draft report, Tavenner specifically states that CMS concurs with the look back period identified by the OIG," she says. "Providers should take note that not only does CMS intend to recover the $1.2 million in overpayments, but they also plan to implement the OIG's recommendation to review and potentially recover the entire population of claims in the sample period."

CMS implemented an edit in the common working file to identify transfer cases for IRF in April 2007. Prior to that, the OIG estimates that based on their total sample size of 5,703 claims reviewed between 2004 and 2007, there were between $34 and $37 million in overpayments paid to providers, according to Twist.

CMS seems to clearly separate the sampling period as being outside the scope of the RACs, so providers may be asked to pull IRF records dating back to FY 2004 for review and potential recoupment by the FI and Medicare administrative contractors (MACs), according to Twist.

"CMS stated they will share the data with the RACs for possible review of post-audit period claims moving forward to ensure their edits are working properly," she says. "But if this sampling period is not managed by the RACs, will CMS recoup identified overpayments prior to completing the appeals process?"

In addition, providers should consider the fact that there appears to be no record pull limitations or recoupment guidelines as is mandated for the RACs in the permanent program. Providers should keep these factors in mind going forward, according to Twist.

"IRF facilities need to consider these matters when planning for their post-payment appeal processes," she says. "In preparation, they should also ensure that they are compliant with the transfer regulations outlined by CMS to avoid future issues."