OIG Releases Report on IRF: CMS Response Indicates Potential RAC Involvement

nbeckleyThis past week the Office of the Inspector General of the U.S. Department of Health and Human Services (OIG) posted a report of a nationwide review of inpatient rehabilitation facilities' transmission of patient assessment instruments for 2006 and 2007.

The CMS response to the report indicates a likely new approved topic for RACs.

Inpatient rehabilitation facilities (IRFs) for each stay are required to submit a patient assessment instrument to the CMS National Assessment Collection Database.

Under the IRF, PPS must include the date the assessment instrument was transmitted on the claim submitted to its fiscal intermediary or MAC. CMS guidance issued in 2001 (Transmittal A-01-131) requires that the IRF transmit the patient assessment instrument data by the "17th calendar day from the date of the beneficiary's discharge." If the actual transmission date is more than 10 calendar days from the mandated transmission date, the patient assessment instrument is considered late, and the IRF's payment rate for the applicable case mix group should be reduced by 25 percent.

The OIG's objective in the case reported this month was to determine if IRFs that submitted required patient assessment data beyond the allowed 27 days had received a reduced case mix patient on the claim as per CMS rules.

The Study

The study comprised the calendar years of 2006 and 2007, in which IRFs submitted 781,708 claims worth $11.9 billion. The audit covered 10,338 of these claims ($166 million), for which the patient assessment data was transmitted after the 27-day deadline and therefore generated risk of overpayment by the FI. The OIG was looking to determine if CMS contractors paid the claims properly (25 percent reduction in case mix payment).

Two hundred claims were selected based on a stratified random sample of the 10,338 claims, with the study particularly focused on 192 of them (there was a determination made that eight either were paid correctly or cancelled.) The study comprised 147 IRFs that submitted the claims in question.

Key Findings

The OIG found that in 113 cases out of 192, IRFs did not receive reduced case mix payments despite having transmitted patient assessment data beyond the 27 days. Based on sampling methodology, CMS estimated the existence of $20.2 million in overpayments to inpatient rehabilitation facilities in 2006 and 2007.

In 79 cases, the data originally had been transmitted within the time frame, but resubmissions by IRFs (to correct errors in the original transmissions) had caused them to be late. CMS determined a potential overpayment to IRFs of $19 million because CMS "written guidance does not address the applicability of the 25 percent penalty in these situations."

The OIG determined that the cause of the overpayments was the lack of internal controls at inpatient rehabilitation facilities to ensure that dates reported on claims for transmission of the patient assessment day. It also was concluded that Medicare did not have "prepayment controls" to compare the actual dates of patient assessment data submission with the date presented on the claim submitted to the FI.

Now What?

CMS largely agreed with the findings and recommendations presented by the OIG. The CMS response also included the decision to immediately reopen the 10,138 non-sampled claims and recover any overpayments (which the OIG estimated to be $19.8 million or more, with additional set-aside potential overpayment at $18.7 million).

CMS also has indicated that it is exploring a strategy with regard to the Recovery Audit Contractors (RACs) review claims on this matter for dates after Oct. 1, 2007.

For more information go to nationwide review of inpatient rehabilitation facilities' transmission of patient assessment instruments for 2006 and 2007.

About the Author

Nancy Beckley is a co-founder and president of Bloomingdale Consulting Group, Inc., providing consulting services to the rehab professional. Nancy is certified in healthcare compliance by the Healthcare Compliance Board, and serves on the Part A and Part B Provider Outreach Education and Advisory Panel for First Coast Services Options (Florida Medicare). She previously served on the CMS Professional Expert Technical Panel for Comprehensive Outpatient Rehabilitation Facilities.

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