Inpatient Rehabilitation Hospitals & Inpatient Rehabilitation Units

Affected Providers

Physicians and non-physician practitioners (NPPs) who have patients in an inpatient rehabilitation facility (IRF) getting Medicare Part A inpatient services.

Background

According to the 2024 Medicare Fee-for-Service Supplemental Improper Payment Data, the improper payment rate for inpatient rehabilitation hospitals is 29.4%, with a projected improper payment amount of $1.4 billion. The improper payment rate for inpatient rehabilitation units is 22.1%, with a projected improper payment amount of $659.1 million.

We define inpatient rehabilitation as all services with a provider type of inpatient rehabilitation hospital or inpatient rehabilitation unit. The projected improper payment amount for IRF services during the 2024 reporting period was $2.0 billion, resulting in an improper payment rate of 26.5%.

The Medicare IRF benefit provides intensive rehabilitation therapy in a resource-intense inpatient hospital environment, including inpatient rehabilitation hospitals and inpatient rehabilitation units. The IRF benefit is for patients who, because of their complex nursing, medical management, and rehabilitation needs, require and expect to benefit from an inpatient stay and an interdisciplinary team approach to rehabilitation care.

Denial Reasons

Medical necessity accounted for 93.8% of improper payments for inpatient rehabilitation hospitals during the 2024 reporting period, while insufficient documentation (6.2%) also caused improper payments.

Medical necessity accounted for 86% of improper payments for inpatient rehabilitation units during the 2024 reporting period, while insufficient documentation (10.8%) and other errors (0.1%) also caused improper payments. “Other” errors include duplicate payment, non-covered or unallowable service, or ineligible Medicare patient errors.

Preventing Denials

For us to cover IRF services, documentation must show a patient’s IRF admission is reasonable and necessary according to our guidelines. Key elements of IRF coverage criteria include a reasonable expectation that, at the time of the patient’s IRF admission, they:

• Require active and ongoing therapeutic intervention of multiple therapy disciplines (physical therapy, occupational therapy, speech-language pathology, or prosthetics and orthotics), 1 of which must be physical or occupational therapy.
• Generally require an intensive rehabilitation therapy program. Under current industry standards, this intensive rehabilitation therapy program consists of at least 3 hours of therapy per day at least 5 days per week. In certain well-documented cases, this intensive rehabilitation therapy program might instead consist of at least 15 hours of intensive rehabilitation therapy within a 7-consecutive-calendar-day period, starting with the IRF admission date.
• Are stable enough and reasonably expected to actively take part in and benefit from an intensive rehabilitation therapy program.
  • The patient can only benefit significantly from the intensive rehabilitation therapy program if their condition and functional status can measurably improve. This means the physician expects intensive rehabilitation to improve the patient’s functional capacity or adaptation to impairments within a prescribed period.
  • Patients who can’t actively take part in and benefit from the intensive rehabilitation therapy services because they’re still completing their course of treatment in the referring hospital should stay in the referring hospital until they’re able to do so.
• Require rehabilitation physician supervision. A rehabilitation physician is a licensed physician with specialized training and experience in inpatient rehabilitation. The IRF decides whether the physician meets training and experience requirements. Under the medical supervision requirement:
  • The rehabilitation physician must conduct face-to-face visits with the patient at least 3 days per week throughout the patient’s IRF stay to assess them both medically and functionally and to change the course of treatment as needed to maximize their benefit from the rehabilitation process, per 42 CFR 412.622.
  • Starting the second week of admission to the IRF, an NPP with specialized training and experience in inpatient rehabilitation can conduct 1 of the 3 required weekly face-to-face visits with the patient. The IRF decides whether the NPP meets training and experience requirements. This must fall within the NPP’s scope of practice under applicable state law.
• Require an intensive and coordinated interdisciplinary rehabilitation approach.

Required IRF claim documentation elements include, but aren’t limited to:

• Comprehensive pre-admission screening that:
  • Is conducted by a licensed or certified clinician appointed by a rehabilitation physician
  • Is completed within the 48 hours before the IRF admission
  • Provides a detailed and comprehensive review of each patient’s condition and medical history
• An individualized plan of care that:
  • Is developed by a rehabilitation physician with input from an interdisciplinary team led in person or remotely through video or phone conferencing
  • Is completed within the first 4 days of IRF admission
  • Supports that IRF admission is reasonable and necessary
  • Generally, includes the expected therapy’s intensity, frequency, and duration
  • Includes an Inpatient Rehabilitation Facility Patient Assessment Instrument (IRF-PAI)

Document the patient’s need for intensive rehabilitation therapy services that require IRF care. Physicians must include correct documentation in the patient’s medical record. Avoid vague or subjective descriptions of the patient’s care needs.

The interdisciplinary team’s participants don’t need to individually sign each team meeting’s documentation, as we require only the rehabilitation physician’s signature to confirm agreement with their decisions.