In September 2018, the U.S. Department of Health and Human Services’ Office of Inspector General (OIG) issued a report criticizing in-patient rehabilitation facilities (IRFs) for improper claims to Medicare. SeeMany Inpatient Rehabilitation Facility Stays Did Not Meet Medicare Coverage And Documentation Requirements, A-01-15-00500.” The report estimated that in 2013 Medicare paid IRFs $5.7 billion for care that was not reasonable and necessary. OIG recommended that CMS increase its oversight of IRF compliance with Medicare coverage and documentation requirements, and CMS concurred. As a result, IRFs can expect enhanced CMS scrutiny of its claims.

The OIG found that many of the IRF admissions sampled “did not reflect that the patients had the medical needs and functional rehabilitation goals that require the complexity and intensity of inpatient rehabilitation.” Per Medicare coverage requirements, IRF stays are intended for patients who need an intense level of interdisciplinary rehabilitation services under the daily direction of a physician, and who are medically stable enough to tolerate this intense level of therapy. The OIG noted though that many patients needed only one kind of therapy and did not need continuous physician supervision. The OIG concluded that the needed therapy services could appropriately have been provided in an alternative, less expensive setting such as a skilled nursing facility or at home with home health services.

The OIG also found that stays that did not meet coverage requirements were predominantly, but not exclusively, related to the following:

  • Generalized weakness, overall fatigue, and impaired mobility for which appropriate therapy would be regular activities, such as walking, use of a wheelchair, or just general exercises;
  • Simple fractures, single extremity deficits, simple or minor trauma, elective or emergency single joint or other orthopedic repair without postoperative complications, or no new and acute significant impairing event or condition;
  • Miscellaneous conditions without complications or other new impairing events to include other orthopedic, central nervous system, cardiac, and pulmonary conditions; or
  • Inability to participate in intense rehabilitation and demonstrate measurable improvement of practical value to the patient.

In addition, the OIG noted a number of the claims lacked appropriate medical record documentation to demonstrate that the coverage requirements were met, including lack of documentation of appropriate physician involvement and oversight.

The OIG recommended that CMS educate IRF clinical and billing personnel on Medicare coverage and documentation requirements and work with providers to develop best practices to improve internal controls and increase oversight activities for IRFs, such as post-payment medical review. OIG also encouraged CMS to implement prior authorization systems and changes to the claims appeal process to be sure that CMS’ interpretations of coverage requirements are adhered to. As a result, IRFs are likely to see increased CMS scrutiny of their Medicare claims to ensure that patient admissions are appropriate for this intense level of service. To prepare for this, IRFs should evaluate their admission practices and strengthen physician oversight of patient’s need for IRF services.