Fact Sheets




  OVERVIEW:  On July 31, 2009, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that would update payment rates and policies under Medicare’s Inpatient Rehabilitation Facility (IRF) Prospective Payment System (PPS). The payment rate updates in the final rule will be effective for discharges from IRFs on or after Oct. 1, 2009. However, to allow facilities more time to adapt their practices to comply with the new coverage requirements established in the final rule, CMS has adopted a Jan. 1, 2010 effective date for these provisions. On this date, CMS also plans to rescind its prior coverage criteria policies, which are contained in a ruling (HCFAR 85-2-1) issued by CMS, the called the Health Care Financing Administration.


In addition to updating the payment rates for IRFs, the final rule clarifies the coverage requirements for inpatient rehabilitation services.  These requirements include provisions addressing inpatient admissions and post-admission procedures, including developing and implementing an overall individual treatment plan for each Medicare beneficiary. The final rule emphasizes the role of a rehabilitation physician in ordering IRF services and providing ongoing oversight of each beneficiary’s care.


In response to comments to the proposed rule, CMS is moving the location of these coverage requirements to a new section of the Code of Federal Regulations.  This is intended to emphasize and clarify that the new coverage criteria do not change the criteria for determining whether a facility meets the “60 percent rule” for purposes of qualifying for payment under the IRF PPS rather than the Inpatient Prospective Payment System (IPPS). Under that rule, at least 60 percent  of a facility’s patients in a year must have at least one of 13 specified conditions as the principal admitting diagnosis, or as a secondary diagnosis that requires an IRF level of care.



BACKGROUND:  Prior to the introduction of the Inpatient Prospective Payment System (IPPS) in 1983, inpatient hospital care was reimbursed on a cost basis. Payment for the inpatient stay generally included payment for both treatment of the acute condition that required inpatient care and any necessary inpatient rehabilitation services. The IPPS changed this, paying for the acute care based on the patient’s diagnosis, as classified under the Diagnosis Related Group, but the new payment rates could not fully address the variability of the rehabilitation portion of a hospital stay. Thus, in 1983, post-acute hospital level rehabilitation services were excluded from the IPPS and continued to be reimbursed on a cost basis.


Guidance on the criteria for Medicare coverage of inpatient hospital rehabilitation services was provided in a HCFA Ruling, HCFAR 85-2-1, and this guidance formed the basis for the policies currently contained in the Medicare Benefit Policy Manual (MBPM).


The new regulatory scheme will replace the prior policies, including those contained in HCFAR 85-2-1.  CMS plans to issue a notice in the Federal Register that will rescind HCFAR 85-2-1, effective Jan. 1, 2010.  CMS also plans to draft new guidance regarding the new coverage criteria that it will place in Medicare Benefit Policy Manual (MBPM).  As amended, the MBPM would provide detailed policy guidance regarding CMS’s interpretations of the coverage criteria regulations adopted under this rule.  In total, these changes will reflect advances in the practice of rehabilitation medicine and changes in Medicare payment policies for IRFs over the past 25 years.


COVERAGE PROVISIONS IN FINAL RULE:  The coverage requirements in the final rule recognize that a potential patient’s treatment outcomes are subject to many factors outside of the IRF’s control. Therefore, these provisions focus on clarifying the key decision points that should be considered and documented when making a decision to admit, retain, or discharge a patient.


These policies were developed in consultation with medical directors from several Medicare fiscal intermediaries, and after careful consideration of comments from representatives of the IRF industry. They reflect current best practices for inpatient rehabilitation services, and are intended to promote greater transparency and consistency in the medical review activities undertaken by Medicare’s contractors. This, in turn, should promote greater certainty for IRFs regarding what they should do to receive consistent payment from Medicare and thereby reduce the number of disputed claims and appeals.


A summary of the key provisions follows.


Preadmission Requirements:   Because IRFs provide intensive inpatient rehabilitation services, it is important that patients admitted to an IRF be willing and able to participate in the rehabilitation activities offered by the facility. Therefore, CMS proposed to require that each candidate for IRF care undergo a comprehensive preadmission screening conducted by a qualified clinician or clinicians designated by a rehabilitation physician (that is, a licensed physician with special training and experience in rehabilitation medicine) no more than 48 hours before admission to the IRF. In response to comments, however, CMS is modifying the language in the final rule to state that a comprehensive preadmission screening may be performed more than 48 hours prior to admission, as long as there is a brief in-person or phone update to update the patient’s medical and functional status.


Documentation of the screening, including documentation of the in-person or phone update of a screening that occurred more than 48 hours before the patient’s admission to the IRF, must be retained in the patient’s medical record. CMS is also finalizing the requirement that the rehabilitation physician review the findings and results of the preadmission screening and document his or her concurrence with them before ordering the IRF admission. These requirements emphasize the importance of the professional judgment of a rehabilitation physician in reviewing the preadmission screening at the time an admission decision is made.


The preadmission screening should address, at a minimum:


·       Whether the patient’s condition is sufficiently stable to allow the patient to actively participate in an intensive rehabilitation program;


·       Whether the patient at the time of admission has the appropriate therapy needs for placement in an IRF; that is, does the patient need the active and ongoing therapeutic intervention of multiple therapy disciplines (physical therapy, occupational therapy, speech-language pathology, or prosthetics/orthotics therapy), one of which must be physical or occupational therapy;


·        Whether the patient requires the intensive services of an inpatient rehabilitation setting, generally recognized as at least three hours of therapy per day at least five days per week.  Intensive rehabilitative services might also include days of less intensive therapy interspersed with more intensive days, so long as the resulting therapy program can be reasonably termed intensive rehabilitation.  For example, a patient might receive varying amounts of therapy from day to day, but 15 hours of therapy per week (defined as a consecutive 7 day period beginning with the day of admission).  In all cases in which the generally recognized (3 hours) of intensive therapy are not provided,  the medical record  must establish and explicitly document the reasons for concluding that the patient’s program constitutes an intensive rehabilitation program; and


·        Whether the patient can reasonably be expected to make measurable improvement that will be of practical value to the patient’s functional capacity or adaptation to impairments.


Post-Admission Requirements:  Because the preadmission screening must be detailed and comprehensive for every patient, CMS proposed not requiring a post-admission inpatient assessment. Instead, the final regulation requires that within 24 hours of a patient’s admission to an IRF, the rehabilitation physician must perform a post-admission evaluation to verify that the information obtained during the preadmission screening is accurate, to identify any relevant changes since the preadmission screening, and to begin development of an overall plan of care designed to meet the individual patient’s needs.  CMS plans to issue new manual provisions to provide further guidance on these regulatory provisions.  The post-admission evaluation should be documented in the patient’s medical record. If the post-admission evaluation determines that the patient is, in fact, not appropriate for IRF care, appropriate steps should be taken to transfer the patient to a more appropriate care setting.


In response to comments, CMS modified the language in its proposed regulations to eliminate the requirement that the rehabilitation physician consult with the interdisciplinary team in preparing the post-admission evaluation, and to specify that therapy treatments must begin within 36 hours of midnight of the day of admission.


Individualized Overall Plan of Care:  Industry best practices suggest, and CMS agrees, that comprehensive planning of the patient’s course of treatment in the early stages of the stay leads to a more coordinated delivery of services to the patient, and such coordinated care is a critical aspect of the care provided in IRFs. Although current regulations require such a plan, they do not contain guidance about how an individualized overall plan of care should be developed, what it should address, and how it should be implemented. Therefore, the final regulation requires that an individualized overall plan of care be developed for each IRF admission by a rehabilitation physician with input from the interdisciplinary team within 72 hours of the patient’s admission to the IRF, and be retained in the patient’s medical record. CMS is also requiring that the interdisciplinary team be comprised of professionals from the following disciplines (each of whom have current knowledge of the beneficiary as documented in the medical record):


·       A rehabilitation physician with specialized training and experience in rehabilitation services; 


·       A registered nurse with specialized training or experience in rehabilitation;


·       A social worker or a case manager (or both); and


·       A licensed or certified therapist from each therapy discipline involved in treating the patient.


Because the average length of stay for patients in IRFs has declined over the years, CMS is requiring that the interdisciplinary team meet at least once a week, rather than once every two weeks, to ensure the appropriate establishment and achievement of treatment goals. CMS is also requiring that the rehabilitation physician be responsible for the final decisions regarding the patient’s care, and that the physician’s concurrence with the decisions of the group with respect to the overall plan of care be documented in the patient’s medical record.


Care Plan Implementation:  CMS is also clarifying that patients who need intensive inpatient rehabilitation services should generally be receiving close medical supervision and individual rehabilitation services. Therefore, CMS is requiring that a rehabilitation physician, or other licensed treating physician with specialized training and experience in inpatient rehabilitation, conduct face-to-face visits with the patient a minimum of at least 3 days per week throughout the patient’s stay to assess the patient both medically and functionally, as well as to modify the course of treatment as needed to maximize the patient’s capacity to benefit from the rehabilitation process.



The final rule went on display on July 31, 2009 at the Office of the Federal Register’s Public Inspection Desk and will be available under “Special Filings,” at:


It will appear in the Aug. 7, 2009 Federal Register.



For more information, please see:



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