Medicare:

More Specific Criteria Needed to Classify Inpatient Rehabilitation Facilities

GAO-05-366: Published: Apr 22, 2005. Publicly Released: Apr 22, 2005.

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Medicare classifies inpatient rehabilitation facilities (IRF) using the "75 percent rule." If a facility can show that during 1 year at least 75 percent of its patients required intensive rehabilitation for 1 of 13 specified conditions, it may be classified as an IRF and paid at a higher rate than is paid for less intensive rehabilitation in other settings. Medicare payments to IRFs have grown steadily over the past decade. In this report, GAO (1) identifies the conditions--on and off the list--that IRF Medicare patients have and the number of IRFs that meet a 75 percent threshold, (2) describes IRF admission criteria and Centers for Medicare & Medicaid Services (CMS) review of admissions, and (3) evaluates use of a list of conditions in the rule. GAO analyzed data on Medicare patients (the majority of patients in IRFs) admitted to IRFs in FY 2003, spoke to IRF medical directors, and had the Institute of Medicine (IOM) convene a meeting of experts.

In fiscal year 2003, fewer than half of all IRF Medicare patients were admitted for having a condition on the list in the 75 percent rule, and few IRFs admitted at least 75 percent of their patients for one of those conditions. The largest group of patients had orthopedic conditions, not all of which were on the list in the rule, which had been suspended in 2002. Almost half of all patients with conditions not on the list were admitted for orthopedic conditions, and among those the largest group was joint replacement patients. Although some joint replacement patients may need admission to an IRF, GAO's analysis showed that few of these patients had comorbidities that suggested a possible need for the IRF level of services. Additionally, GAO found that only 6 percent of IRFs in fiscal year 2003 were able to meet a 75 percent threshold. IRFs varied in the criteria used to assess patients for admission, and CMS has not routinely reviewed IRF admission decisions. IRF officials reported that the criteria they used to make admission decisions included patient characteristics such as function, as well as condition. CMS, working through its fiscal intermediaries, has not routinely reviewed IRF admission decisions. The experts IOM convened and other clinical and nonclinical experts GAO interviewed differed on whether conditions should be added to the list in the 75 percent rule but agreed that condition alone does not provide sufficient criteria to identify the types of patients appropriate for IRFs. The experts IOM convened questioned the strength of the evidence for adding conditions to the list, finding the evidence for certain orthopedic conditions particularly weak, and they called for further research to identify the types of patients that need inpatient rehabilitation and to understand the effectiveness of IRFs. Other experts did not agree on whether conditions, including a broader category of joint replacements, should be added to the list. Experts, including those IOM convened, generally agreed that condition alone is insufficient for identifying appropriate types of patients for inpatient rehabilitation, since within any condition only a subgroup of patients require the level of services of an IRF, and contended that functional status should also be considered.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: On August 3, 2007, CMS reported that 13 fiscal intermediaries have approved local coverage determinations regarding IRFs and that reviews have been conducted by Recovery Audit Contractors in 3 states.

    Recommendation: To help ensure that IRFs can be classified appropriately and that only patients needing intensive inpatient rehabilitation are admitted to IRFs, the CMS Administrator should ensure that fiscal intermediaries routinely conduct targeted reviews for medical necessity for IRF admissions.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  2. Status: Closed - Not Implemented

    Comments: On August 3, 2007, CMS reported that to promote research that better identifies the types of patients whose treatment requires an IRF setting, CMS collaborated with several crucial stakeholders. Working with the National Center for Medical Rehabilitation Research (NCMRR) and the National Institute of Child Health and Human Development at the National Institutes of Health, a panel was convened in February 2005 to develop a research agenda. The NCMRR issued a notice on the need to enhance the evidence base (http://grants.nih.gov/grants/guide/notice-files/NOT-HD-07-005.html). CMS also reported that they have been participating in various NIH panel discussions to foster research. CMS also reported that it has analyzed available data to assess the impact of the 75 percent rule (http://www.cms.hhs.gov/InpatientRehabFacPPS/Downloads/IRF_PPS_75_percent_Rule_060807.pdf)

    Recommendation: To help ensure that IRFs can be classified appropriately and that only patients needing intensive inpatient rehabilitation are admitted to IRFs, the CMS Administrator should conduct additional activities to encourage research on the effectiveness of intensive inpatient rehabilitation and the factors that predict patient need for intensive inpatient rehabilitation.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  3. Status: Closed - Not Implemented

    Comments: On August 3, 2007, CMS reported that the 75 percent rule will be refined in the future, but enforcement was resumed after GAO's report was issued.

    Recommendation: To help ensure that IRFs can be classified appropriately and that only patients needing intensive inpatient rehabilitation are admitted to IRFs, the CMS Administrator should use the information obtained from reviews for medical necessity, research activities, and other sources to refine the rule to describe more thoroughly the subgroups of patients within a condition that are appropriate for IRFs rather than other settings, and may consider using other factors in the descriptions, such as functional status.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

 

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