The Centers for Medicare and Medicaid Services (CMS) proposed fiscal year (FY) 2007 rates for inpatient rehabilitation facilities (IRFs) in the Federal Register on May 15, 2006. The rates are per stay and vary according to primary diagnosis, comorbidities, and functional status.  
 
A 0.5% overall increase in payments is proposed. This updating of rates is not directly related to the “75 percent rule” which has been challenged by the rehabilitation hospital industry, but affirmed in the Deficit Reduction Act.

A proposed 3.4% increase due to market basket inflation is offset by a 2.9% reduction that adjusts for coding practices. The reduction is based on an analysis by the RAND Corporation that continues to show that coding practices change dramatically when a comorbidity is moved to a higher payment level. For example: Diagnosis code 278.02 (Overweight) was coded as a comorbidity .0004% of 1.8 million initial patient assessments 2002 through 2005. After being moved to a higher level for FY 2006, in the first quarter 278.02 was coded 2% of 113,000 initial assessments.
 
CMS rejected the Medicare Payment Assessment Commission’s (MedPAC) recommendation that there be no increase in IRF payments rates for FY 2007. The MedPAC recommendation is based on an estimate that IRFs experienced a 9.2% profit margin in 2006 which is quite adequate to handle input costs.
 
The proposed 0.5% rate increase and the increase to 65% in the 75% rule phase-in is not expected to affect the volume of speech-language pathology services rendered. The designated diagnoses that qualify for the 65% requirement represent a vast majority of all diagnoses that cause adult speech-language or dysphagia disorders (i.e., stroke, brain injury, neurological disorders, and spinal cord injury).
 
Comments must be submitted to CMS by July 7. The full text of the proposed regulation may be viewed at: http://a257.g.akamaitech.net/7/257/2422/01jan20061800/edocket.access.gpo.gov/2006/pdf/06-4409.pdf. For further information, please contact Mark Kander, ASHA’s Director of Health Care Regulatory Analysis, at 800-498-2071, ext. 4139, or by e-mail at mkander@asha.org.