Medical Device Daily Washington Editor

The Centers for Medicare & Medicaid Services published its proposed rule for prospective payment for inpatient rehabilitation facilities (IRFs) last month and is sorting through the feedback, including a letter from the Medicare Payment Advisory Commission (MedPAC). The CMS payment rule covers discharges from facilities for the fiscal year 2008, and would boost total payments by about $150 million to roughly $6.3 billion. According to CMS estimates, slightly more than 1,200 IRFs will receive payments next fiscal year.

CMS Administrator Leslie Norwalk said in a prepared statement that the rule "continues Medicare's commitment to support access to inpatient rehabilitation facility services while at the same time improving the appropriateness and consistency of payment for beneficiary care in all post acute settings."

The rule would keep CMS on track for phase-in of the 75% rule, which requires that at least three-fourths of an IRF's total inpatient population have one of the 13 medical conditions that CMS has designated for intensive inpatient rehabilitation services. This rule came into being in 1983 along with a rule that eliminated cost as a basis for payment, but according to the CMS press release, "the IRF PPS provides higher payment levels than would be paid for these cases under the [hospital] IPPS, thus the need to continue this important classification initiative." In 2003, CMS suspended the 75% threshold for a 65% setting for three years.

One feature of the 75% rule that has industry most abuzz is a rule that deals with a set of co-morbidities that have qualified patients under the 75% rule for the past few years, even if that patient does not have one of the 13 conditions. This provision is scheduled to sunset Jan. 1, 2008, and CMS has expressed little interest in extending the exception.

As for payment numbers, the agency has reviewed data from FY 2005 and is proposing to sharply increase the high-cost threshold, from slightly more than $5,500 to roughly $7,500, but to tighten the numbers of patients whose care would qualify. CMS said this move "would maintain estimated payments at 3% of total payments under the IRF PPS." A lower threshold would "require an across-the-board reduction in the base payment for an IRF stay" to achieve budget neutrality, according to the CMS statement.

In a June 11 letter to Norwalk, Glen Hackbarth, chairman of the Medicare Payment Advisory Commission (MedPAC), said commission members have "been supportive of CMS's efforts to clinically distinguish IRFs from other Medicare providers" in part because of the high cost of operating an IRF, but he described the 75% rule as "a blunt instrument." He stated that MedPAC favors a less stringent approach to patients who do not qualify under the 13 conditions, but who nonetheless "may benefit from the level of rehabilitation that only an IRF can provide." Hackbarth recommended that CMS "periodically revisit the list of diagnoses" with an eye toward "moving away from simple diagnosis-based criteria to more specific patient-based criteria."

The health subcommittee of the House Ways and Means Committee hosted a hearing Tuesday to assess strategies to boost comparative effectiveness data, drawing a list of witnesses that included Carolyn Clancy, MD, the director of the Agency for Healthcare Research and Quality (AHRQ), and Mark Miller, the executive director of MedPAC. As Clancy pointed out in her written testimony, the amazing amount of medical research in the modern world has made it difficult "to evaluate these innovations and determine which represent added value, which offer minimal enhancements to current choices, which fail to reach their potential, and which work for some patients and not for others."

Miller was quicker to the point. "There is not enough comparative-effectiveness information available to patients, providers and payers to make informed treatment decisions." On behalf of MedPAC, Miller suggested that Congress form an independent entity to "sponsor credible research on the comparative effectiveness of healthcare services and disseminate this information."

MedPAC also recommended an independent entity with a secure source of funding that would "sponsor studies that compare" treatments, which in some cases might consist of analysis of existing studies. Miller said that "the Commission prefers a public-private" partnership for staffing such a body, with funding at least in part by the public sector.

"We emphasize that the entity would not have a role in how payers apply this information," Miller noted.

On the other hand, Clancy pointed out that her agency already has authority "to conduct and support evidence synthesis and research on topics of highest priority" for government health programs via AHRQ's Evidence-based Practice Centers. The agency is looking at treatments for several conditions, including renal artery stenosis, but Clancy also urged the panel to fund a $15 million request for a "federated system of databases that can help answer comparative effectiveness questions." She also noted that government has to earn the trust of both industry and patients, stating that "we must move to an atmosphere where it is unacceptable to hold back research findings that may have an impact on the care that patients receive."

SEC releases ComplianceAlert to aid public companies

The staff of the Securities and Exchange Commission (SEC) released its first ComplianceAlert letter to help chief compliance officers of SEC-registered firms learn more about common deficiencies and weaknesses that SEC examiners are finding during compliance examinations.

This broader sharing of recent examination findings can benefit compliance officers and help them to proactively fine-tune their compliance and supervisory controls, the SEC said.

The SEC's Office of Compliance Inspections and Examinations conducts compliance examinations of SEC-registered investment advisers, investment companies, broker-dealers, and transfer agents to determine whether firms are in compliance with federal securities laws and rules, and to help correct deficiencies and weaknesses in compliance and supervisory controls.

The SEC staff's ComplianceAlert letter, available on the SEC Web site, summarizes select areas that SEC examiners have recently reviewed during examinations, describes issues that were found, and encourages firms to review compliance in these areas and implement improvements as appropriate. SEC staff plans to issue additional ComplianceAlert letters on the SEC Web site.

SEC Chairman Christopher Cox said, "Investors are best protected when securities firms operate in full compliance with the law. Along with our CCOutreach Program, these ComplianceAlert letters are another step in our efforts to continue helping chief compliance officers foster robust compliance in the securities industry."