(Medicare Claims Processing Manual)

C. - The A/B MAC (A) adjusts payment to the hospital by calculating the difference between the amount actually paid for services to Medicare patients in the IRF hospital, IRF unit, or new IRF beds during the period of provisional exclusion, and the amount that would have been paid if the IRF hospital, IRF unit, or new IRF beds had not been excluded from the IPPS. The A/B MAC (A) then takes action to recover the resulting overpayment, or corrects the underpayment to the hospital.  140.2 - Payment Provisions Under IRF PPS  (Rev.  11504, Issued 08- 05-22; Effective:10 -01-22; Implementation: 10 -03-22)  Section 1886 of the BBA provides the basis for establishing the Federal payment rates applied under PPS to IRFs. The PPS incorporates per discharge federal rates based on average IRF costs in a base year updated for inflation to the first effective period of the system.  IRF PPS providers are not subject to the 3-day payment window for pre -admission services, but are subject to the 1-day payment window for pre -admission services.   Beneficiary liability will operate the same as under the current Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) payment system. Even if Medicare payments are below cost of care for a patient under prospective payment, the patient cannot be billed for the difference in any case.  Below are the annual rate update Change Requests (CRs) for Fiscal Years 2003-2022:   FY 2022  CR 12364  FY 2021  CR 11858  FY 2020  CR 11345  FY 2019  CR 10826  FY 2018  CR 10125  FY 2017  CR 9669  FY 2016  CR 9236  FY 2015  CR 8788  FY 2014  CR 8326  FY 2013  CR 7901  FY 2012  CR 7510  FY 2011  CR 7076  FY 2010  CR 7029  FY 2010  CR 6607 FY 2009  CR 6166 FY 2008  CR 5694 FY 2007  CR 5273 FY 2006  CR 4037 FY 2005  CR 3378 FY 2004  CR 2894 FY 2003  CR 2250  Change Requests can be accessed through the following CMS Transmittals Website: https://www.cms.gov/Regulations -and-Guidance/Guidance/Transmittals/index.html   Rate and weight information used by the IRF Pricer is updated periodically, usually annually, and is published in the Federal Register. Updates occur each October, to reflect the fact that IRF PPS rates are effective for a Federal fiscal year. Updates may also occur at other points in the year when required by legislation.  Whenever these update items change, Medicare also publishes a Recurring Update Notification to inform providers and A/B MACs (A) about the changes. These Recurring Update Notifications also describe how the changes will be implemented through the IRF Price r.  140.2.1 - Phase -In Implementation  (Rev. 2673, Issued: 03 -14-13, Effective: 04 -22-13, Implementation: 04- 22-13)  Under the BBA, the Federal fiscal year in which a facility's cost reporting period begins determines which transition period percentages apply. The first transition period percentages are applicable for cost reporting periods beginning during Federal fiscal year 2001. The second transition period percentages are applicable to cost reporting periods beginning during Federal fiscal year 2002, that is, periods beginning on or after October 1, 2001, and before October 1, 2002. For cost reporting periods beginning during Federal fiscal year 2003 and after, payment is based on 100 percent of the adjusted Federal prospective payment.    Since CMS is implementing the IRF PPS for discharges that occur during the IRF's cost reporting period that begins on or after January 1, 2002, IRFs are phased directly into the second transition period, where payment will be based on 66 2/3 percent of the PPS payment and 33 1/3 percent of the TEFRA payment. A facility will continue to be paid under the TEFRA (reasonable cost -based) system for its entire cost reporting period beginning prior to January 1, 2002.   In addition, 305 of the BIPA 2000 states facilities may elect to be paid 100 percent PPS payment, rather than payment based on the transition method. If a facility chooses not to be paid under the transition method, they must notify their A/B MAC (A) no later than 30 days prior to its first cost reporting period for which the IRF PPS applies to the facility. The request to make the election must be made in writing to the Medicare A/B MAC (A) for the facility.  The A/B MAC (A) must receive the request on or before the 30th day before the applicable cost reporting period begins, regardless of any postmarks or anticipated delivery dates. Requests received, postmarked, or delivered by other means after the 30th day before the cost reporting period begins will not be approved. If the 30th day before the cost reporting period falls on a day that the postal service or other delivery sources are not open for business, the facility is responsible for allowing sufficient time for delivery of the request before the deadline. If a facility's request is not received or not approved, payment will be based on the transition method.  140.2.2 - Payment Adjustment Factors and Rates (Rev. 2673, Issued: 03 -14-13, Effective: 04 -22-13, Implementation: 04- 22-13)  Section 1886(j) of the Act s ets forth the  methodolo gy for establishing the payment rates as well as the data on whi ch the y are based.  In addition, this s ection pre scribes adjustm ents to suc h rates based on geographic variation a nd cas e-mix and othe r factors the Secretary deems n ecessary to ensure that payment most accur ately reflects cost.  For the initia l period of  the IRF  PPS, be ginning on or after January 1, 2002, a ll payment rates and associated rules were publish ed in the  "Federal Register" on August 7, 20 01.  For each succeedi ng fiscal year, the rates will be  publishe d in the  "Federal Register" on or  before Au gust 1 of  the year preceding the affected fiscal year.  140.2.3 - Case-Mix Groups (Rev. 2673, Issued: 03 -14-13, Effective: 04 -22-13, Implementation: 04- 22-13)  In general, a case will be  grouped into a  Case-Mix Group ( CMG)  based on the  clinical characteristics of the Medicare beneficiary.  Rehabilita tion I mpairment Categories (RICs), functional measu rements, age, and comor biditie s were used to de velop the  CMGs. Specifically, RICs are used to g roup cas es that are simila r in clinical c haracteristics and resource use.  The  RICs are codes that indi cate the primary cause of the rehabilita tion hospit alization a nd ar e clinically homogeneous.  In addition to the  first two dig its of  the CMG indi cating  the RIC, the CMGs a re further partition ed usi ng functional measures of motor  and cognitive  scores.  Age improves the explanatory power of the C MGs if  some  groups  are split b ased on this var iable.  Lastly, comorbidites were found to subst antially increase the average cost of  a case in  specific CMGs.  The  comor biditie s are arrayed in three categories (or tiers) based on w hether the costs ar e considered hi gh, medium, or low.  If a case has more than one  comor bidity, the CMG p ayment rate will be based on the comor bidity that results in the  highest payment.  140.2.4 - Case-Level Adjustments (Rev. 2673, Issued: 03 -14-13, Effective: 04 -22-13, Implementation: 04- 22-13)  Payment is b ased on t he CMGs d escribed above, as well as possible  adjustm ents sp ecific to the  case  and the facility characteristics.  For case level adjustm ents, mor e than one  case level adjustm ent may apply to the  same case.  For ease of understanding, the case  level discussion is pre sented below in the  same order that is us ed to a ssess wh ether or not the y apply.  For example, a case may be classified as a transfer, but m ay also receive additional pa yments becaus e it me ets the  definition of  an outli er case.  Interrupt ed stays are defined as those  cases in wh ich a Medicare beneficiary is discharged from the  inpa tient rehabilita tion facili ty and returns to the  same inpatient rehabilita tion facilit y within 3 c onsecutive calendar days.  The 3 consecutive  calendar days begin with the  day of the discharge from the  IRF and ends on midni ght of the third day.  The  length of stay for these cases will be determined by the total length of the IRF stay including the d ays prior to the  interruption a nd the  days after the interruption.  One  CMG payment will be  made for interrupted stay cases and the  payment will be  based on the initia l assessment. For example, if a Medicare beneficiary is dis charged on February 1, 2001, and is readmitt ed on F ebruary 3, the case  would b e considered a n interrupt ed stay and onl y one CMG p ayment will be  made based on t he initia l assessment.  Howe ver, if the Medicare beneficiary was readmitt ed on Fe bruary 4, then it would not be  considered an interrupted stay.  A s eparate DRG payment will not be  made to the  acute  care hospit al when the be neficiary is dis charged and re turns to the  same IRF on the  same day.  However, a DRG payment can b e made if the beneficiary does not r eturn to the  same IRF on the same day as they were discharged.  If a case is determined to be  an interrupted stay, other a djustme nts m ay apply to this pa yment amount.  For example, the case still ma y meet the d efinition of  a transfer case  described below.  For the IRF PPS, t ransfer cases are defined as thos e in whi ch a Medicare beneficiary is transferred to e ither another rehabilita tion facili ty, a long term care hospit al, an inpa tient hospit al, or a nursing home  that accepts pa yment unde r either the Medicare program and/or  the Medicaid program AND the  length of stay of the case is less than the average length of stay for a given CMG.  The  transfer policy consists of  a per diem payment amount cal culated by dividing the per discharge CMG p ayment rate by the average length of stay for the CMG.  M edicare will p ay transfer cases a per diem amount a nd include an additiona l half day payment for the first day.  Transfer payments will be  calculated by first adding  the length of stay of the case to 0.5 ( to account f or the addition of the half day payment for the first day) and the n multip lying the result b y the CMG p er diem amount.   The IRF PPS  also in cludes a payment adjustm ent for certain cas es, such as short-stay cases (for cases that do n ot meet the  definition of  a transfer case).  A s eparate CMG payment (5001)  will be  made for cases with a  length of stay of 3 da ys or less, without consideration of  the clinical characteristics of the patient.  Cases  that expire with a le ngth of stay of 3 da ys or less, will also be  classified to CMG 5001.