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Nationwide Review of Inpatient Rehabilitation Facilities� Transmission of Patient Assessment Instruments for Calendar Years 2006 and 2007

Inpatient rehabilitation facilities (IRF) did not always receive reduced case-mix-group payments for claims with patient assessment instruments that were transmitted to CMS�s National Assessment Collection Database (the Database) more than 27 days after the beneficiaries� discharges. To administer the prospective payment system, CMS requires IRFs to electronically transmit a patient assessment instrument for each IRF stay to the Database, which the Iowa Foundation for Medical Care (the Foundation) maintains. If an IRF transmits the instrument more than 27 calendar days from (and including) the beneficiary�s discharge date, the IRF�s payment rate for the applicable case-mix group should be reduced by 25 percent.

We found that IRFs did not receive reduced case-mix-group payments for 113 of the 200 sampled claims with patient assessment instruments that were transmitted to the Database after the 27-day deadline. Based on these sample results, we estimated that fiscal intermediaries made a total of $20.2 million in overpayments to IRFs for dates of service in calendar years 2006 and 2007. Additionally, for 79 claims, IRFs initially transmitted patient assessment instruments to the Database within the 27-day deadline but subsequently retransmitted these instruments after the deadline to correct errors. CMS guidance does not address the applicability of the 25-percent penalty in these situations. We estimated that fiscal intermediaries may have made an additional $19 million in overpayments to IRFs for claims with these instrument retransmissions.

We recommended that CMS (1) adjust the 113 sampled claims for overpayments of $424,000; (2) determine whether any of the $323,000 potential payment penalty should apply to the 79 sampled claims with modified patient assessment instruments that were transmitted after the 27-day deadline; (3) immediately reopen the 10,138 nonsampled claims, review our information on these claims (which have overpayments estimated at $19.8 million and set-aside payments estimated at $18.7 million), and recover any overpayments; (4) alert IRFs to the importance of reporting the correct patient assessment instrument transmission dates on their claims; (5) consider establishing a process that would allow the Fiscal Intermediary Shared System (FISS) to interface with the Database to identify, on a prepayment basis, IRF claims with incorrect patient assessment instrument transmission dates; (6) ensure that fiscal intermediaries have access to Foundation reports that document late or missing patient assessment instrument transmissions and use these reports to conduct periodic postpayment reviews; (7) revise the FISS edit to count the discharge date as day 1 in the 27-day counting sequence used to apply the 25-percent payment penalty; and (8) establish written policies to address whether patient assessment instruments that are retransmitted after the 27-day deadline to correct errors in the initial timely transmissions are subject to the 25-percent payment penalty. CMS concurred with our recommendations and described the steps that it had taken or planned to take to address the issues we identified.