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Inpatient Rehabilitation Hospitals

Inpatient rehabilitation hospitals (also referred to as inpatient rehabilitation facilities, “IRFs”) play a unique and critical role in the post-acute continuum of care. Under the leadership of rehabilitation physicians, IRFs provide medically necessary care and services on a multi-disciplinary basis to patients who require intensive therapy, round-the-clock nursing care and ongoing medical oversight by physicians skilled in medical rehabilitation, enabling patients to improve function, relearn critical life skills, gain independence and return to their homes and communities.

Prior Authorization

The rationale for applying prior authorization to IRF care is misguided and based on Medicare contractors’ suspect practice of excessive denial of claims due to highly technical documentation, as evidenced by IRFs’ high rates of overturning denied claims on appeal. Instead, prior authorization of IRF care undermines medical judgment and leads to improper denials, reduced access to care, referrals to less effective care settings that can compromise patient outcomes and lengthy delays that cause irreversible harm to beneficiaries. Given the critical nature of IRF’s intensive, ongoing care, rigorous patient admission and coverage criteria have already been established and rigorously applied specifically for this level of care.

The 60% Rule

The current “60% rule” stipulates that in order for an IRF to be considered for Medicare reimbursement purposes, 60% of the IRF’s patients must have a qualifying condition. There are currently 13 such conditions, including, stroke, spinal cord or brain injury and hip fracture, among others.  

CMS should rescind the 60% Rule because it is an outdated policy that is out of sync with today’s vision of patient-centered care decisions pertaining to where patients receive post-acute care should be made based solely on patients’ rehabilitative, medical and nursing needs and their physicians’ judgment as to where those needs are optimally met.

Alternatively, CMS should expand the 60% Rule’s compliant conditions. There have been no major medical categories added to the Rule for more than 30 years despite numerous advancements that have enabled IRFs to care for broader patient populations including cardiac, cancer and transplant cases, among others.

Site-neutral Payment

Under a so-called “site-neutral” payment policy, the payment for a service provided to a patient is the same regardless of the setting where the service is provided. FAH and its member hospitals agree with the goal of ensuring patients receive the right care, at the right time, in the right setting. However, blunt site-neutral payment policies between IRFs and other settings, especially Skilled Nursing Facilities (SNFs), will not achieve this goal and may risk jeopardizing access to medical rehabilitation crucial for the high acuity patients cared for by IRFs.

Site-neutral payment policies cannot be effectively implemented unless and until there is adoption of major changes in the regulatory requirements of post-acute care (PAC) providers to level the playing field across PAC settings. In addition, there must be clear, unambiguous empirical evidence that patient quality of care and outcomes are not compromised. Further, site-neutral policies must recognize the higher cost structures of PAC providers caring for the most severely compromised patients with the greatest clinical and functional needs. Otherwise, site-neutral payment policies risk becoming site preference policies under which patients may simply be steered to the setting with the lowest payment independent of clinical appropriateness. 

IRF Payment Flexibility Innovation

CMS continues to develop and implement bundled payment programs which place financial risk on acute care hospitals for post-acute care (PAC) spending. Options for acute care hospitals to reduce PAC spending, however, are currently limited to encouraging patients to receive PAC in settings that receive lower Medicare payments or encouraging PAC providers that have the ability to reduce payments to do so. However, IRFs are unable to reduce their Medicare payments to help hospitals because episode target prices and performance period are based on Medicare’s per-discharge payment to IRFs.

A voluntary CMMI bundling program that would allow IRFs to assume the risk of caring for certain patients over a defined period of time and with sufficient regulatory relief would enable IRFs to more fully and robustly participate in these bundled payment programs. It would provide hospitals with broader flexibility to discharge their patients to the most appropriate level of post-acute care needed to meet their patients’ needs, focusing on what is best for the patient.