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August 30, 2010

Prospective Payment System for Inpatient Rehabilitation Facilities for FY 2010 (CMS-1538-P)

Proposed Rule

Report Card

Score: 25 / 60

RULE SUMMARY

This proposed rule would update the payment rates for inpatient rehabilitation facilities (IRFs) for Federal fiscal year (FY) 2010 (for discharges occurring on or after October 1, 2009 and on or before September 30, 2010) as required under section 1886(j)(3)(C) of the Social Security Act (the Act). Section 1886(j)(5) of the Act requires the Secretary to publish in the Federal Register on or before the August 1 that precedes the start of each fiscal year, the classification and weighting factors for the IRF prospective payment system’s (PPS) case-mix groups and a description of the methodology and data used in computing the prospective payment rates for that fiscal year. We are proposing to revise existing policies regarding the IRF PPS within the authority granted under section 1886(j) of the Act.

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Criterion	Score
Openness
1. How easily were the RIA , the proposed rule, and any supplementary materials found online? 0938-A956 can be found from regulations.gov using the RIN and a keyword search, as well as on the Department of Health and Human Service's website. It can be found by clicking on regulations, regulations and guidance under medicare, then on Quarterly provider updates-regulations. Here, search under QPU April-June 2009. The Department offers a list of proposed rules.	4/5
2. How verifiable are the data used in the analysis? Tables list the proposed wage index for each urban location and for rural locations. A link to all underlying data files on the HHS website is provided.	5/5
3. How verifiable are the models and assumptions used in the analysis? Two adjustment factors are calculated based on regression analysis originally performed by the RAND Corporation. The original RAND studies are cited and linked. Market-basket adjustment is attributed to IHS Global Insight, but not to a specific publication. Proposed changes in regulations governing how to offer services are justified simply because they reflect "current industry practices," "best practices," or seem logical to HHS.	3/5
4. Was the analysis comprehensible to an informed layperson? Half a dozen unfamiliar acronyms, employed where simple words would do, make this difficult to follow. Calculations are explained well, and a table shows the incremental effect of each calculation. A specialist could follow the discussion.	3/5
Analysis
5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?	1/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life? Presumably the ultimate outcome desired is either better health for patients, cost savings, or both, but neither is explicitly articulated. In a few places, the documents make passing reference to outcomes related to health or efficient administration: "We believe that the use of an interdisciplinary team instead of a multidisciplinary team will ensure that patients achieve better outcomes," "by promoting a more consistent understanding of CMS’s IRF coverage policies among stakeholders, thereby leading to fewer disputed IRF claims denials," and "by enabling them to plan their future Medicare payments more accurately." However, these are the only mentions of actual outcomes dispersed throughout the RIA.	1/5
Does the analysis identify how these outcomes are to be measured? The change in cost to federal government is calculated.	1/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes? Since outcomes are not defined, there is no relevant content.	0/5
Does the analysis present credible empirical support for the theory? Since outcomes are not defined, there is no relevant content.	0/5
Does the analysis adequately assess uncertainty about the outcomes? One paragraph mentions that there may be inaccuracies in the forecasts due to factors HHS cannot control, such as passage of new health care legislation. This is merely an acknowledgement; there is no analysis of uncertainties.	1/5
6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?	2/5
Does the analysis identify a market failure or other systemic problem? No explicit justification offered for the calculated payment changes, beyond implementation of the law. Changes in the "presumptive" method for establishing whether a facility qualifies for payment under this regulation were proposed to accommodate growth in Medicare Advantage program, which was not anticipated at the time this method was devised.	3/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal? It presents no explicit theory for the payment changes. The adjustment involving Medicare Advantage occurs because facilities previouly qualified based on the percentage of paients from Medicare Part A. As patients left Part A for Advantage, the percent of patients at these facilities from Part A fell, but this does not really reflect a reduction in the type of patient HHS wants to qualify. Some other changes in regulations are motivated by changing circumstances, which are explained logically but not extensively.	2/5
Does the analysis present credible empirical support for the theory? Not much substantial evidence is presented. For some regulatory changes, a few statistics are presented that help demonstrate that times have changed.	2/5
Does the analysis adequately assess uncertainty about the existence or size of the problem? No relevant discussion.	0/5
7. How well does the analysis assess the effectiveness of alternative approaches?	1/5
Does the analysis enumerate other alternatives to address the problem? Several tweaks on the calculation methods are considered.	2/5
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)? This is a narrow range of alternatives. Almost all of the alternatives were rejected because HHS believes the chosen alternative more accurately reflects recent conditions or the most appropriate assumption to base calculations upon.	1/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved? No relevant discussion.	0/5
Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future? The baseline is calculated by applying new payment rates to a previous year's data. "We use the best data available, but we do not attempt to predict behavioral responses to these proposed changes, and we do not make adjustments for future changes in such variables as number of discharges or case-mix."	1/5
8. How well does the analysis assess costs and benefits?	1/5
Does the analysis identify and quantify incremental costs of all alternatives considered? Costs are only presented for the alternative HHS selected. A table shows the incremental effect of each proposed adjustment in the payment method.	2/5
Does the analysis identify all expenditures likely to arise as a result of the regulation? The analysis shows projected changes in federal expenditures, but there is no analysis of whether these changes (or other regulatory changes in the federal register notice) will lead to changes in private expenditures.	3/5
Does the analysis identify how the regulation would likely affect the prices of goods and services? Only in the sense that the regulation calculates new payments.	2/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation? The RIA explicitly declines to predict behavioral responses to proposed changes.	0/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis? There is no analysis of cost uncertainties. One paragraph acknowledges there are uncertainties due to factors outside HHS control.	1/5
Does the analysis identify the alternative that maximizes net benefits? Since outcomes are not named or measured, net benefits are not calculated.	0/5
Does the analysis identify the cost-effectiveness of each alternative considered? Since outcomes are not named or measured, cost-effectiveness is not calculated.	0/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs? A table shows the effects of each change in the payment method on hospitals categorized by size, location, ownership, and teaching status.	4/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits? The documents mention patients and providers but do not extensively assess effects on either (except for payments, identified above under cost incidence.) Since outcomes are not defined or measured, benefit incidence is not calculated.	1/5
Use
9. Does the proposed rule or the RIA present evidence that the agency used the analysis? Only in the sense that the calculations determine the prices the government will pay for services.	3/5
10. Did the agency maximize net benefits or explain why it chose another alternative? Since outcomes are not defined or measured, net benefits are not even calculated.	0/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future? No relevant discussion. Costs could be tracked, but not benefits.	1/5
12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so? HHS clearly has access to data on costs, case mix, and perhaps other variables, but it is not clear if it has tracks any outcome data for these facilities that could be used to assess results of the regulation.	1/5

Total	25 / 60

Additional details

Agency: Department of Health and Human Services
Regulatory Identification Number: 0938-AP56
Agency Name: Department of Health and Human Services
Rule Publication Date: 05/06/2009
Comment Closing Date: 06/29/2009