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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, inpatient rehabilitation hospitals provide medically necessary rehabilitation 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.

Given the critical nature of this intensive, ongoing care, rigorous patient admission and coverage criteria have been established 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. 

There is ongoing discussion among policymakers about whether the 60% threshold should be increased, requiring the IRF to have a greater portion of qualifying patients for reimbursement.  Expanding the 60% rule, as some suggest, forces a shifting of patients from the IRF setting to the skilled nursing facility (SNF) setting simply to satisfy a new “target,” thus further limiting patient access to the medical rehabilitation services provided only in IRFs. There has already been a substantial decline in the utilization of IRF services as a result of the 60% rule as well as the comprehensive refinements in 2010 to IRF patient and coverage criteria.

There has been a corresponding increase in the acuity of patients treated by IRFs. These more medically complex and functionally impaired patients require medical rehabilitation services only available in IRFs, and any expansion in the 60% rule threatens access to IRF services for these patients.

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.  In theory, site neutral payment policy has merit.  The 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 SNFs will not achieve this goal, and may risk jeopardizing access to medical rehabilitation crucial for the high acuity patients cared for by IRFs.

IRF patients require and receive rehabilitation services that differ substantially from the services provided in a SNF - differences that are reflected in the fact that IRFs must meet stringent regulations and other policies designed specifically in recognition of the intensity of care delivered in an IRF setting.

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.  Otherwise,  site neutral payment policies risk becoming site preference policies.  This would serve patients poorly, seeking the setting with the lowest payment independent of clinical appropriateness.  Further, site neutral policies would not recognize the higher cost structures of PAC providers caring for the most severely compromised patients with the greatest clinical and functional needs.

While, in theory, site neutral payment policy has merit, in practice, implementation at this time is premature, and policymakers should refrain from adopting it. There are important clinical and functional differences between IRF patients and SNF patients that would be significantly underestimated by site-neutral payments failing to recognize the need for highly effective risk and case-mix adjustment and conforming regulatory changes.