Rebasing 'window' could mean a $1 million boost
Rebasing window’ could mean a $1 million boost
Start acting like a facility using FRGs’
A window of opportunity is open for some hospital rehab and psych facilities to receive an upward adjustment of their Medicare TEFRA limits, but you have to act fast.
Under the Balanced Budget Act of 1997, hospital rehab and psych facilities whose current Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) caps even after adjusting for inflation are not meeting costs, can apply to Medicare for an adjustment or rebasing.
But that window of opportunity is very limited, says Hal Wagher, JD, director of Fowler Healthcare Affiliates, a health care consulting firm in Atlanta that offers advice on development and strategic planning for post-acute, outpatient, skilled nursing, and physician practices as well as Medicare reimbursement.
Under the new budget, the Health Care Financing Administration (HCFA) allows one opportunity to apply for a rebase during FY1998, which began Oct. 1.
The deadline for rebase requests is either Nov. 1, 1997, or 60 days prior to the start of your cost reporting period beginning in Medicare’s FY1998 which ever comes later. So, for example, if your fiscal year begins March 1, you have until Jan. 1 to file a request for a rebasing of your TEFRA cap.
Hospitals that have TEFRA limits for psych and rehab ranging from less than $5,000 up to $16,000 could be rebased to levels as high as $10,200 for psych and $18,500 for rehab during 1998, according to Wagher. On an annual basis, that could translate into an additional $1 million in Medicare reimbursement for rehab and psych facilities.
"It’s not something they’ll make a lot of money at," Wagher cautions. But for facilities who do receive a rebase of their TEFRA limit, "They’ll be able to live with their existing cost structure."
On the other hand, "If they were actually doing a good job in keeping their costs below their [TEFRA] limit, then they’re not eligible" for rebasing, he adds.
Here’s how Wagher says you can determine if your hospital rehab or psych facility is eligible for a rebase:
1. For individual rehab or psych units, look at the previous five settled (not outstanding) Medicare cost reports. For example, if the latest settled Medicare cost report dates from 1995, start from that one and work backward five years, Wagher says.
2. On each Medicare cost report, look at the figure for your operating cost per Medicare discharge.
3. For those five years, throw out the highest and lowest operating cost per discharge.
4. Using the figures for the remaining three years, update each one by the update factor for that year published in the Federal register. (This is essentially a market basket index that adjusts for inflation.)
5. Take an average of those three inflation-adjusted figures.
6. Look at the updated inflation-adjusted average. "If it is greater than the provider’s existing TEFRA rate, then [Medicare] may rebase it to that higher amount," Wagher says. Contact your fiscal intermediary with the information.
TEFRA limits, which were put in place "temporarily" in 1983, are expected to be replaced with function related groups (FRGs) similar to the diagnosis related groups (DRGs) currently used to determine Medicare reimbursement for hospital inpatient care. FRGs are slated to be phased in over a three-year period beginning Oct. 1, 2000.
Although the federal government has a track record of announcing new Medicare reimbursement programs then delaying the actual implementation, Wagher advises providers to take this Medicare start date seriously. "I would operate on the premise that they won’t delay," he says. "I would start behaving like a provider under an FRG system just to start phasing up to it."
Other post-acute health care providers have changes in store as well. (See time line, above.) A PPS is slated for skilled nursing facilities beginning July 1998, and will be phased in over a three year period. Home health facilities will face a PPS beginning in FY1999, which will be phased in over four years. And by 2001, the Secretary of the U. S. Department of Health and Human Services is expected to make recommendations regarding a PPS for outpatient rehab, according to Wagher.
For more information contact: Hal Wagher, JD, Director, Fowler Healthcare Affiliates, 900 Circle 75 Parkway, Suite 1360, Atlanta, GA 30339. Telephone: (770) 955-5957 or (800) 784-9829.
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