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 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.  

CMS should rescind the 60 Percent Rule because it is an outdated policy that is out of step with today’s vision of patient-centered care.  If an orthopedic surgeon, oncologist, rheumatologist, cardiologist, thoracic surgeon, organ transplant surgeon, or other medical practitioner or specialist has concluded her/his treatment of a patient in an acute care hospital and determined that the patient requires an IRF level of care and services, the patient should not be prevented from receiving that level of care by the restrictive effects of the 60 Percent Rule.  Decisions pertaining to where patients receive post-acute care should be made based 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 Percent Rule’s compliant conditions.  There have been no major medical categories added to the Rule for more than 30 years – when the Rule was implemented in its current form, in 2004, the modifications to the list of medical categories comprising it were aimed at narrowing the types of arthritis and orthopedic cases that can satisfy it.  However, medical rehabilitation has achieved numerous advancements over the past 30 years, and these advancements 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.  In theory, site neutral payment policy has merit.  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 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.

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.

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.  There is currently no flexibility for IRFs to reduce their Medicare payments for the benefit of hospitals participating in the bundled payment models, regardless of the cost-efficiencies an IRF may generate. This is because episode target prices and performance period spending in Medicare’s bundled payment programs are based on Medicare payments, and Medicare payments to IRFs are per-discharge (not per diem) and diagnosis based (not therapy based).

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. This approach directly aligns with CMS’s recognition of the need for payment flexibility as Medicare reimbursement moves towards alternative payment models and away from fee-for-service.

Such a voluntary payment model should include a rescission of the 60 percent rule and the three-hour rule (a rule that only applies to IRFs requiring a duration of therapy per day).  These rules reduce the flexibility needed to address patient need in a bundled payment arrangement.