Will Rehab Be Rationed in 2006? Access to Services Could Be Restricted by Therapy Caps, Fee Cuts, “75% Rule” Medicare patients who need rehabilitation services are getting a triple dose of bad news as 2006 approaches-through resumption of the Medicare therapy caps, a 4.3% reduction in the Medicare fee schedule, and the continued phasing in of the “75% Rule” that could disqualify many inpatient rehabilitation facilities (IRFs) from participating ... Policy Analysis
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Policy Analysis  |   November 01, 2005
Will Rehab Be Rationed in 2006? Access to Services Could Be Restricted by Therapy Caps, Fee Cuts, “75% Rule”
Author Notes
  • Marat Moore, managing editor of The ASHA Leader, can be reached at mmoore@asha.org.
    Marat Moore, managing editor of The ASHA Leader, can be reached at mmoore@asha.org.×
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Regulatory, Legislative & Advocacy / Policy Analysis
Policy Analysis   |   November 01, 2005
Will Rehab Be Rationed in 2006? Access to Services Could Be Restricted by Therapy Caps, Fee Cuts, “75% Rule”
The ASHA Leader, November 2005, Vol. 10, 1-8. doi:10.1044/leader.PA.10162005.1
The ASHA Leader, November 2005, Vol. 10, 1-8. doi:10.1044/leader.PA.10162005.1
Medicare patients who need rehabilitation services are getting a triple dose of bad news as 2006 approaches-through resumption of the Medicare therapy caps, a 4.3% reduction in the Medicare fee schedule, and the continued phasing in of the “75% Rule” that could disqualify many inpatient rehabilitation facilities (IRFs) from participating in the Medicare program.
“Unless Congress acts, Medicare patients receiving rehabilitation services will face serious restrictions in access to needed care,” said Catherine Gottfred, ASHA’s Vice President for Governmental and Social Policies.
The caps on outpatient rehabilitation services under Medicare Part B, would be set at $1,740 per year if the existing moratorium is lifted on Jan. 1, 2006 as scheduled. Speech-language pathologists and physical therapists would share a single $1,740 cap, placing greatest restrictions on those services.
ASHA and other provider and patients’ rights groups are vigorously opposing these restrictions on vital rehabilitation services, which would affect speech-language pathologists, occupational therapists, and physical therapists. Sen. Charles Grassley (R-IA), chairman of the Senate Finance Committee, has proposed measures in the budget reconciliation bill to prevent these restrictions from being implemented-including a one-year moratorium on the implementation of the Medicare therapy caps. (A summary of Grassley’s proposal can be found at http://finance.senate.gov/sitepages/leg/102005lsumm.pdf.)
The Senate Finance Committee has also proposed a 1% increase in 2006 payments under the Medicare physician fee schedule. Such an increase would prevent the projected 4.3% cut in fees. In addition, the proposed bill would freeze at 50% the implementation of the 75% Rule, keeping access open to more seniors needing inpatient rehabilitation services.
Like many clinicians and administrators, David Thompson, director of inpatient rehabilitation services at Lewis-Gale Medical Center in Salem, VA, is concerned about these looming changes.
Thompson said that implementation of the therapy caps on Jan. 1 would be “a tracking nightmare”—particularly for SLPs and physical therapists, who have to share an annual $1,700 cap.
“I don’t think the original intent of the Medicare program was to become as difficult to interpret as tax laws, but that’s what has happened for both providers and beneficiaries,” he said.
The 75% Rule
Most IRFs have completed their first year under the new 75% Rule guidelines, and are moving from 50% toward the requirement that 75% of admitted patients each year must fit into one of 13 diagnoses or conditions to receive inpatient rehabilitation services. Currently the percentage of required admissions stands at 60%, with the rule set to be fully implemented at the 75% level by 2007.
There are 13 diagnoses that are recognized for IRF admission, which include stroke, spinal cord injury, brain injury, neurological disorders, and limited orthopedic conditions. The rule disqualifies certain prospective new admissions based on their primary diagnosis, even though the patient may have a severe communication disorder that could benefit from intensive rehabilitation services.
Grassley’s reconciliation package would freeze implementation of the rule at 50% while Congress and the Federal Department of Health and Human Services study the impact of the restriction.
“As written, the 75% Rule forces Medicare patients to be discharged to levels of care based on their diagnosis-not on their functional level and prognosis for recovery,” Thompson said.
“Under this rule, every year more seniors will be denied inpatient rehabilitation services, which will eventually cause some IRFs to close,” Thompson said. “These patients will be moved into skilled nursing facilities or back into acute-care hospital settings.”
A recent study by the American Hospital Association and allied groups finds that the rule is having a far greater impact on admissions than predicted by CMS. The agency estimated that 1,200 patients would be affected by the rule-but the study finds that more than 40,000 are feeling the impact.
ASHA and a coalition of hospital rehabilitation groups are urging Congress to pass H.R. 3373 and S. 1405, companion bills which would prohibit CMS from requiring a compliance rate greater than 50% and restrict the use of medical necessity reviews in IRFs to the criteria established in the Medicare Benefit Policy Manual.
Pay for Performance
The legislative package includes provisions on pay-for-performance or “value-based purchasing.” Using this approach, acute-care hospitals, physicians, other practitioners (SLPs are specifically cited in the legislation), managed care plans, end-stage renal disease providers, and home health agencies would receive 1% of pooled provider payments, growing to 2% over five years based on quality performance measures.
ASHA is working with Medicare’s Centers for Medicare and Medicaid Services (CMS) and Congress to gain recognition of ASHA’s National Outcomes Measurement System (NOMS) as the data collection and benchmarking tool for speech-language pathology services. Data collected from NOMS could potentially be used by CMS in the development of a pay-for-performance payment methodology for speech-language pathology services.
Sen. Grassley’s proposal is the first step in a lengthy and uncertain process for Congress to act on an omnibus budget reconciliation bill that will also include short-term Medicaid reforms. In the U.S. House of Representatives, the Energy and Commerce Committee and the Ways and Means Committee leaders are expected to consider only Medicaid reform measures and Hurricane Katrina relief provisions as part of their budget reconciliation bills.
Write a Letter to the Editor on Therapy Caps
Be a 5-Minute ASHA Advocate

Medicare beneficiaries will again face benefit cuts if Congress fails to act by Dec. 31. ASHA urgently needs your help by writing a ‘letter to the editor’ in your local papers. In less than five minutes, you can send a letter to the editor by e-mail to your local papers based on your zip code. ASHA’s Take Action Web site now offers an editable, draft letter that conveys the very real and negative impact associated with the return of the therapy caps. Visit http://takeaction.asha.org, scroll down, and select “Write a Letter to the Editor on Therapy Caps.” For more information and resources, visit ASHA’s Therapy Cap Advocacy Center or contact Reed Franklin by e-mail at rfranklin@asha.org or by calling 800-498-2071, ext. 4473.

2006 Medicare Fee Schedule Update

In a victory for audiologists and speech-language pathologists, the Centers for Medicare and Medicaid Services (CMS) announced its decision to defer the proposed elimination of the non-physician work pool (NPWP) for at least a year. The decision was reported in the final rule for the 2006 Medicare physician fee schedule that was released on Nov. 3.

ASHA vigorously advocated against CMS’s proposed elimination of the NPWP. The agency earlier proposed eliminating the work pool beginning in 2006-which would have resulted in a 21% reduction for audiology services over a four-year period. The continued use of the work pool will maintain or closely approximate current total relative value units.

ASHA will continue to work with both CMS and Congress to promote a more reasonable alternative to eliminating this crucial reimbursement category. ASHA, through the Health Care Economics Committee, has taken its case to CMS and the American Medical Association Relative Value Update Committee.

ASHA has prepared a detailed analysis of the Medicare fee schedule as it affects speech-language pathology and audiology services. The complete text of CMS’ final rule for the 2006 Medicare fee schedule can be found online. Watch for an in-depth analysis of other aspects of the 2006 Medicare fee schedule in the Dec. 27 issue of The ASHA Leader. For more information contact Mark Kander via e-mail at mkander@asha.org or by phone at 800-498-2071, ext. 4139.

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November 2005
Volume 10, Issue 16