Press release



The Centers for Medicare & Medicaid Services (CMS) today proposed changes in the criteria for classifying hospitals as inpatient rehabilitation facilities (IRFs). Medicare reimburses these hospitals, which provide specialized care for patients recovering from conditions requiring intensive inpatient rehabilitation therapy, such as strokes or spinal cord injury, under a prospective payment system.

The proposed rule would reduce from 75 to 65 the percentage of patients in the facility who are admitted because they are diagnosed with one of the specific qualifying medical conditions and require intensive rehabilitation services in an inpatient setting. These conditions include stroke, spinal cord injuries, congenital deformity, amputations, major multiple traumas, fracture of femur, brain injuries, polyarthritis, neurological disorders, and burns.

"In this proposed rule, we are taking a fresh look at the current 75 percent rule to see if it should be changed," said CMS Administrator Tom Scully. "We are proposing significant revisions to the rule."

The proposed rule would also:

  • Delete the term "polyarthritis" from the current list of 10 qualifying conditions and replace it with three groups of conditions that will more precisely identify the types of arthritis-related ailments appropriate for care in a rehabilitation facility. As a result, the proposed 65 percent rule would now apply to a total of 12 medical conditions.
  • Continue to use the inpatient rehabilitation facility’s total patient population to determine compliance with the proposed 65 percent rule, but establish an administrative presumption that if the facility’s Medicare patient population complies with the rule, the facility’s total population complies.
  • Count toward the proposed 65 percent, not only those patients whose principal diagnoses match the 12 conditions, but also those who have a secondary medical conditionthat meets one of the 12 conditions. The secondary condition, however, must cause such a significant decline in the patient’s functioning that, even in the absence of the admitting condition, the patient would require treatment in an inpatient rehabilitation facility, rather than in another setting such as an inpatient hospital, skilled nursing facility, home health or outpatient setting.
  • Change the period of time to review patient data to determine compliance with the proposed 65 percent rule from the most recent 12-month cost reporting period to the most recent, appropriate and consecutive 12-month time period.
  • No later than 3 years from the effective date of the final rule, change the compliance percentage to 75 percent and phase out the use of a secondary medical condition to determine compliance. These changes will occur automatically on January 1, 2007, unless prior to that date CMS publishes a final rule adopting another method or readopting these same methods as part of the criteria used to classify a facility as an IRF.

CMS suspended enforcement of the current rule in June 2002 because of concerns that it was being enforced inconsistently.

"Because we have decided to take another look at the 75 percent rule, we will be instructing our fiscal intermediaries to refrain from enforcing the rule until the revised rule becomes effective," said Scully. "But the rule remains extremely important in separating inpatient rehab hospitals from other types of inpatient facilities, and ensuring the Medicare pays for patients who are getting intensive rehabilitation in the most appropriate setting."

The notice of proposed rulemaking will be published in the September 9 Federal Register. CMS will accept comments on the proposal until November 3, and will publish a final rule as soon thereafter as possible.