Inpatient Rehabilitation Facilities - What Has Changed?

On December 11, 2017, the Centers for Medicare and Medicaid Services (“CMS”) published MLN Matters Special Edition 17036 (“SE 17036”), “Inpatient Rehabilitation Facility (“IRF”) Medical Review Changes”.   So, what has changed?  One only needs to read the second paragraph that states “SE 17036 reiterates policy related to claims submitted with regard to services provided to Medicare beneficiaries IRF’s”.  When Medicare reiterates a policy, there is usually a reason. 


 IRF’s provide rehabilitation for patients recovering from illness and/or surgery who require an inpatient hospital-based interdisciplinary rehabilitation program, supervised by a rehabilitation physician.  Beginning with discharges on January 1, 2010, IRF’s were expected to provide documentation that there is a reasonable expectation that the patient:

  • Needs multiple intensive therapies, one of which must be physical or occupational therapy;
  • Is able to actively participate in the therapies;
  • Is expected to be able to benefit significantly from the therapies;
  • Requires supervision by a rehabilitation physician;
  • Requires an intensive and coordinated interdisciplinary team approach to the delivery of care.

Subsequently, there has been a myriad of guidance on what these requirements mean and how to meet them.  Despite this guidance, IRF’s remain in the spotlight and continue to receive scrutiny from the Office of the Inspector General (“OIG”), and Medicare Administrative Contractors (“MAC’s”), not to mention the Recovery Audit Contractors (“RAC’s”) and the Comprehensive Error Rate Testing (“CERT”) Program.  In their 2016 work plan, the OIG announced intentions to review IRF payment system requirements. The intent was to determine whether IRF’s have billed claims in compliance with Medicare documentation and coverage requirements (W-00-15-35730). This same plan, though revised, appeared in the OIG plan for 2017 with an expected issue date during Fiscal Year (“FY”) 2017.  As of today, this audit remains on the OIG work plan with an expected release date in FY 2018. 

Current Situation

 In the FY 2017 work plan, the OIG announced a new issue, “Case Review of Inpatient Rehabilitation Hospital Patients Not Suited for Intensive Therapy”.   The OIG published their results in December of 2016 (OEI-06-003602) and identified 39 inpatient rehabilitation stays from freestanding rehabilitation hospitals in March of 2012 in which the patient was unable to actively participate in, and benefit from intensive therapy. Of the 39 patients, 32 were not suited for the intensive therapy due to preexisting physical limitations, lack of endurance, unresolved health problems, and altered mental status.

The OIG concluded that CMS should consider providing additional technical assistance to ensure that Medicare patients are placed in the most appropriate setting for post-acute care and that IRF’s do not admit patients who are unable to participate in, and benefit from, intensive therapy. Eleven months after the OIG conclusion, CMS issued SE 17036 which reiterates medical necessity guidelines for intensive inpatient rehabilitation. 
In summary, SE 17036 illustrates the need for careful, well documented post-acute care planning, which may put the onus back on the acute care facility to provide the appropriate supporting documentation.  This is a subtle shift away from a record simply containing the correct IRF pre-admission screening forms.  The focus will be on supporting documentation that clearly states why the patient will receive the most appropriate care and will benefit more quickly and significantly only in the IRF setting.  CMS wants proof that the increased expense of IRF coverage is appropriate and cost effective for the patient prior to entering the IRF.  

What does this mean for IRF's?

 To be compliant with Medicare guidelines and avoid assessment of overpayments, IRF’s need to ensure that preadmission documentation is robust and paints a picture of a patient who meets all the criteria for acute inpatient rehabilitation.  This may need to exceed the required elements in the preadmission screening form, to include documentation that answers some of the following questions:

  1. Does the documentation illustrate that the patient is willing and able to participate in intensive therapy?  If there is documented unwillingness to participate in intensive therapies prior to IRF, it is likely to continue after admission, resulting in an inappropriate admission to IRF.
  2. How does documentation support the patient’s functional and mental status prior to the acute illness?  If there is dementia and/or low functional status, documentation would need support why this type of patient could improve significantly with IRF intensive therapies, and why a less intensive setting would be inappropriate. If the prior level of functioning is likely low, but is unclear or undocumented, the prior level of functioning should be established and documented prior to consideration for IRF to avoid possible inappropriate admission.
  3. Does documentation support that the patient’s acute medical condition has been appropriately diagnosed and treated such that it is not a barrier to participation in the intensive therapies of the IRF?  Is the patient undergoing additional medical workup or a scheduled surgical procedure? In these cases, with an unknown outcome, the likelihood that documentation could prove the patient’s ability to benefit from intensive rehabilitation is low and could result in an inappropriate admission to IRF.
  4. Does documentation support that the patient should be able to achieve significant measurable improvement within a 7 to 14 day timeframe? If inpatient therapy shows only minimal gain over the inpatient stay, documentation should be very clear why the patient will be able to make significant achievements in the IRF.
  5. What are the anticipated discharge plans from IRF? Does the patient have a safe home to go to with appropriate support?  Are they likely to eventually be placed in a SNF?  If admitted to IRF knowing this information, the entire admission could be ruled as being inappropriate.

In summary, proactive preadmission documentation development and adherence to the principals of admission for IRF’s will help avoid negative consequences from the inevitable scrutiny foreshadowed by the recent CMS release and impending release of the OIG report.

SunStone offers services specifically geared toward IRF documentation improvement, compliance with admission guidelines, and compliance with required documentation post IRF admission.  If you have any questions, please contact Vonda Moon, Principal at, or Laura Ehrlich, Senior Clinical Specialist at