Final IRF Rule Is a Challenge

Vol. 17 •Issue 21 • Page 25
Final IRF Rule Is a Challenge

IRF billing requires 75% Rule compliance and good documentation.

At first glance, the 3.2 percent increase slated for reimbursement to inpatient rehabilitation facilities (IRFs) in fiscal year 2008 seems to be a positive change. However, the 75% Rule—rules regarding documentation specific to IRFs—and the Centers for Medicare and Medicaid Services (CMS) recovery audit contractors (RACs) paint a more daunting picture for the rehabilitation industry.

The final rule for the prospective payment system for IRF reimbursement for 2008 went into effect on Oct. 1. Meanwhile, the 3-year RAC pilot program in California, Florida and New York yielded a return on investment of 373 percent for 2006. Office of Inspector General (OIG) audit reports resulted in Catholic Medical Center of Manchester, NH, owing $1.7 million in IRF overpayments and Whittier Rehabilitation Hospital of Westborough, MA, owing $4.8 million in overpayments. In both cases, the auditors found that a significant number of patients could have been treated in a less intensive setting, such as outpatient rehab or a skilled nursing facility.

Meanwhile, the most recent annual OIG Work Plan addressed IRF classification criteria and included an initiative to review the extent of admissions to IRFs and whether they meet specific regulations and whether the facilities billed for services compliantly. That includes IRF discharges that should have been transfers and outlier payments to IRFs.

Disappointing Final Rule

The American Hospital Association (AHA) released a statement that it is “deeply disappointed” in the final IRF prospective payment system (PPS) rule for fiscal year 2008. The AHA and other industry associations are criticizing the fact that CMS chose not to extend the comorbidities provision that allows certain patients to count toward the 75% Rule. The rule requires that a certain percentage of IRF patients fall under one of 13 primary diagnoses. The diagnosis mix rule has been phased in gradually starting at 50 percent in 2004 and will rise to 75 percent as of July 1, 2008, as mandated by the Deficit Reduction Act of 2005. The rule states that, although comorbid conditions of IRF patients currently count toward compliance with the 75% Rule, as of July 1, 2008, the condition must be primary.

The rehab industry continues to lobby for postponement of the 75% Rule. “As we’re moving forward in this next fiscal year, the fact that CMS dug in its heels about maintaining the 75 percent threshold rule indicates that they’re not vacillating on the full implementation schedule,” said Cherilyn G. Murer, JD, CRA, president and CEO of Murer Consultants Inc., a health care management consulting firm based in Chicago. “There needs to be greater consideration to appropriateness of patient population.”

Facilities that have struggled to achieve the mandated diagnostic mix when the level was 60 percent or 65 percent could face serious consequences, Murer said. “The 75% Rule goes to the essence of classification.” Problems with classification as an IRF threatens a facility’s future, even if the facility is a hospital that only contains an IRF unit. “The message is that everyone needs to pay careful attention. Everyone needs to prepare to be compliant with this rule.”

Documentation Drives Compliance

The most important way to be compliant with the 75% Rule is through documentation. “Quality and articulation of documentation is a national issue,” said Murer. IRF rules require that a patient be medically stable enough to receive 3 hours of therapy a day. If that rule is not met, “CMS will be looking to doctors to justify the condition that keeps the patient in the rehab program with lagging functional capability.”

IRF documentation must include:

  • Admission history and physical, including relevant information from the prior acute care stay, which communicates the assessment and treatment plan of the admitting physician.
  • Hospital discharge summary, as well as discharge summaries from other disciplines, to support the admission history and physical (H&P).
  • Physician orders for the patient’s care during the IRF stay that specify the types and goals of therapies as well as any restrictions or precautions.
  • Physician progress notes, which demonstrate frequent, direct and medically necessary physician involvement, at least every 2 to 3 days during the IRF stay, including changes to the expectations of the planned course and predicted functional gains.
  • Initial therapy assessments and reassessments, which should contain quantifiable information regarding functional progress, including the patient’s functional status prior to the acute care admission.
  • Team evaluation notes, which must demonstrate a multidisciplinary team approach to improve the patient’s functional ability. At a minimum, the team notes should document the involvement of a physician, rehab nurse and at least one therapist. Documented frequency of team conferences should be at least once every 2 weeks.
  • Daily therapy and nurse’s notes that include dates, times and signatures of the providers, as well as their credentials.
  • Reasonable and reportable goals that are individualized, measurable and realistic.

    With all of these requirements, it’s easy to understand why documentation is “a matter of constant attention and retrospective review,” said Murer. Her firm uses case study methodology with its clients. She also recommends that IRFs review documentation on a quarterly basis. They also have providers read each other’s notes to ensure that they can interpret what the other was trying to communicate.

    Coder Burdens

    Once documentation is complete, coders must pick up comorbid conditions to help IRFs comply with the 75% Rule, says Patricia Trela, RHIA, principal of PATrela Consulting, based in Quincy, MA. “Don’t accept the documentation at face value. The physician might not document very well something that falls in the 75% Rule.”

    Another burden on coders for IRFs is knowing the difference between coding appropriately for UB-04 forms and the IRF-PAI (patient assessment instrument).

    That includes using either principal diagnoses or etiologic diagnosis–the ICD-9-CM code that indicates the etiologic problem that led to the impairment for which the patient is receiving rehabilitation. “The UB-04 has one set of guidelines and the IRF-PAI has another that the coder might not even know about,” Trela said.

    Coders have not had appropriate education, Trela added. There are many gray areas and often, facilities send clinicians to rehab symposia. They can bring back inaccurate information for coders, she noted. Another problem is that IRF PPS coordinators often don’t have a background in coding or medical records. “There is very little education out there,” stressed Trela. “You can’t teach it in an hour.” If you bring in an educator, make sure it’s someone with a rehab background, Trela advised.

    As if correct coding, documentation and diagnosis mix regulations aren’t enough, RAC audits are taking a toll on the rehab industry as well. RAC audits are the biggest challenge, said Trela. “The part that’s the most interesting is that they are contracted by CMS to find overpayments. They get to keep a percentage of those overpayments. That’s a big incentive for them.”

    Murer agreed. “We need to be sure that the reviewers are being objective and that they have impeccable credentials and knowledge skills.”

    The OIG’s interest in IRF reimbursement should put IRFs on notice. “Any time the OIG identifies specific facilities, it makes implementation of the rules more realistic,” said Murer. “So, even if it hasn’t affected your own facility, the fact that the OIG is looking with great attention to these issues should make all rehab programs take heed.”

    What Next?

    There’s still a chance that the 75% Rule could change—the House version of the State Children’s Health Insurance Program (SCHIP), which drives the diagnosis mix threshold, “still has some legs,” said Murer. “There is still some hope, but we have to act upon the legislation as it is today. The rules are the rules as they sit today. If it changes, we will react accordingly.”

    Meanwhile, the coding challenges of IRFs could be simplified with a move to ICD-10, said Trela. That, of course, introduces a host of new challenges. It’s clear that IRF coding and billing won’t get easier anytime soon.

    Beth Walsh is a writer/editor focusing on HIT.

    The 13 diagnoses that are included in the IRF PPS 75% Rule:


    2.Spinal cord injury

    3.Congenital deformity


    5.Major multiple trauma

    6.Fracture of femur (hip fracture)

    7.Brain injury

    8.Neurological disorders (including, but not limited to, MS, MD, polyneuropathy and Parkinson’s disease)


    10.Active, polyarthricular rheumatoid arthritis, psoriatic arthritis and seronegative arthropathies

    11.Systemic vasculidities with joint inflammation

    12.Severe/advanced osteoarthritis involving two or more major weight-bearing joints (not counting joints with a prosthesis) with joint deformity, substantial loss of range of motion and atrophy of muscles surrounding the joint

    Note: In actual CMS regulations, the diagnoses in #10, #11, and #12 include additional qualifications/limitations.

    13.Knee or hip joint replacement, with one or more of the following circumstances applying:

  • The patient underwent bilateral knee or bilateral hip joint replacement surgery during acute hospitalization.
  • The patient is extremely obese with a Body Mass Index of at least 50 at time of admission to inpatient rehabilitation hospital.
  • The patient is age 85 or older at the time of admission.
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