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Fiscal Year 2012 PPS Final Rule The Impact of the Rate Change

Information on Rehab Rates, NON-Rehab Rates, Wage Index Change, and other issues raised in the FY2012 Final Rule.

Medicare has just released the Final Rule for the Medicare rate year FY2012 which starts October 1, 2011 and ends September 30, 2012. The press releases you may have read indicate that there has been an 11.1% decrease in the rates.

Unfortunately, it's not quite that simple, and for some providers, the cut will be deeper than 11%. This article explains the changes and provides some tools for determining what the impact to your facility will be. Keep the following in mind:

  • All Rehab rates have been reduced by more than 11%, some rehab rates have been reduced by over 20%
  • NON-Rehab rates have actually increased
  • Each provider's individual mix of Medicare Part-A days will determine the facility specific impact for that provider
  • The change in your Wage Index figure will also influence facility specific impact, either negatively or positively

The change in rates is not a simple 11.1% reduction. In other words CMS did not simply start with last year's rates and reduce them all by 11.1%. Rather, to get to the reduced rates CMS has "re-calibrated" the "nursing index" figures for certain RUG categories in an attempt to change the rates in a manner and amount that they believe will result in an overall decrease of the 11.1%. Additionally, CMS changed different categories by different percentages.

Rehab Rates vs. NON-Rehab Rates

All of the rates for the "R" (rehab) categories have been reduced by more than 11%. Some "R" category rates have been reduced by over 20%. Conversely, the NON-Rehab rates have actually gone up by almost 1.8% (before the wage index adjustments). Remember, your individual mix of Medicare Part-A days will determine your facility specific impact.

Wage Index Changes

Each provider is located in a specific CBSA (Core-Based Statistical Area). Each CBSA has a wage index figure associated with it. Those wage index figures have changed, some have increased and some have decreased. If your wage index figure has decreased, the impact (the decrease in revenue) will be greater. Conversely, if your wage index figure has gone up, the decrease in revenue for your facility will be mitigated, slightly. You need to understand the change in your wage index as well as your mix of Medicare Part-A days to completely analyze the impact on your facility.

Impact Analysis Tool

We at Axiom have developed an impact analysis tool to allow you to estimate the impact on your facility and posted it on our website. To access this tool, please go to the link below:

Calculation Tool for FY12 PPS Rates 

When you get to the tool on our website, you will need to do the following:

  • Determine whether your facility is Urban or Rural, and select the appropriate version of the tool.
  • Use the drop-down menu to select the county your facility is located in. The drop-down choices appear in Column I, row 10.
  • Input the Medicare Part-A days into the designated column (Column O). We recommend using days from 10/1/2010 and forward. The longer period you use, the better.
  • Analyze the resulting changes.

Additional Issues Raised in the FY2012 Final Rule

Future Axiom Advisor articles will focus on a variety of other issues raised in the FY12 Final Rule. Some of these issues have the potential to change the manner in which you deliver care, perhaps significantly.

With any questions about this, please contact us at 888-66-AXIOM or simply reply to this email.