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Inpatient rehabilitation facility and Medicare Coverage determinations

Medicare Inpatient rehabilitation facility (IRF) Coverage

inpatient rehabilitation facility
Inpatient rehabilitation facility and Medicare Coverage determinations

Medicare Inpatient Rehabilitation Facility (IRF) Coverage

Medicare Part A (Hospital Insurance) covers medically necessary care that insured patients receive in an inpatient rehabilitation facility or unit (‘ inpatient ‘rehab facility, IRF, acute care rehabilitation center, or rehabilitation hospital). A physician must certify that you have a covered medical condition that requires intensive rehabilitation, continued medical supervision, and coordinated care that comes from your care team of physicians and therapists working together.

In 2013, according to MedPac, Medicare spent $6.8 billion on fee-for-service inpatient rehabilitation facilities care provided in about 1,160 IRFs nationwide. About 338,000 beneficiaries had more than 373,000 IRF stays. On average, sixty-one percent of IRF discharges are Medicare insureds.

Medicare Inpatient Coverage and Insured Out of Pocket Costs

A beneficiary pays different amounts for each episode of care during each benefit period:

  • Days 1-60 – set deductible.*
  • Days 61-90: daily coinsurance
  • Days 91 or more days: coinsurance per each “lifetime reserve day” after 90 days for each benefit period (up to 60 days).
  • Each day after lifetime reserve days, the Medicare insured bears all other costs.

*A Medicare insured does not have to pay a deductible for the care received in the inpatient rehabilitation facility if already charged a deductible for the care in a prior hospitalization within the same benefit period.

Medicare Covered Rehabilitation Services

Inpatient rehabilitation covers insureds who are recovering from a high acuity condition that requires surgery, for certain illnesses, or an injury. Services include therapy programs, physician supervision, and doctors and therapists who provide coordinated care.

Medicare rehabilitation services covers:

  • Physical therapy, occupational therapy, and speech-language pathology
  • Semi-private rooms and meals
  • Nursing services
  • Medications
  • Other services and supplies

Medicare does not cover:

  • Private nursing
  • Phone or television in your room if there is an additional charge for it
  • Personal items (unless provided as part of hospital admission at no extra charge).
  • A private room, unless there is physician documentation of the medical necessity

Inpatient Diagnoses and Episodic Codes for Inpatient Rehabilitation Facilities

1.     Rehabilitation with comorbid conditions / major comorbid conditions

2.     Rehabilitation without comorbid conditions / major comorbid conditions

3.     Alcohol/drug abuse or dependence with rehabilitation therapy

4.     Alcohol/drug abuse or dependence without rehabilitation therapy, with major comorbid conditions

5.     Alcohol/drug abuse or dependence without rehabilitation therapy, without major comorbid conditions

Types of Inpatient Rehabilitation Facilities

Profit levels vary based on several factors, including bed size. See also long-term care hospitals and post-acute care hospitals.

  1. For-profit
  2. Not for profit

The Joint Commission recognizes disease-specific care, integrated care, cardiac care, total hip, tobacco, psychiatric, memory care.

Applicable Facility by Condition

An inpatient rehabilitation facility may be indicated for patients with complex medical conditions who require intense medical rehabilitation. If the patient does not have a complex condition or requires only basic rehabilitative support, a skilled nursing facility may be appropriate.

Examples of Conditions Treated by Inpatient Rehabilitation Facilities

  1. Stroke
  2. Nervous system disorder (excluding stroke)
  3. Brain disease or condition (non-traumatic)
  4. Brain injury (traumatic)
  5. Spinal cord disease or condition (non-traumatic)
  6. Spinal cord injury (traumatic)
  7. Hip or femur fracture
  8. Hip or knee replacement, amputation or other bone or joint condition

Medicare Coverage Determinations

There are over ninety (90) Medicare Local Coverage determinations that pertain to the new ICD-10 diagnosis coding standard. These policies (sometimes called Local Coverage Determinations or LCDs) apply to various patient conditions, in different Medicare Administrative Contractor jurisdictions and services including but not limited to:

  1. Cardiac rehabilitation
  2. Cognitive rehabilitation
  3. Nerve conduction rehabilitation
  4. Low vision
  5. Speech pathology
  6. Nerve blocks
  7. Pulmonary stress testing
  8. Wound care rehabilitation
  9. Respiratory rehabilitation
  10. Lung volume reduction
  11. Biofeedback
  12. Vestibular and audiologic
  13. Psychiatric
  14. Lower limb prosthesis
  15. Occupational therapy
  16. Physical therapy
  17. Home health therapy
  18. Swallowing studies
  19. Barium swallow studies
  20. Verteoblasty[i] / Kyphoplasty[ii]
  21. Dysphasia
  22. Ophthalmic
  23. Somatosensory
  24. Infrared coagulation of hemorrhoids
  25. Pelvic floor dysfunction
  26. Lumbar spinal fusion

Medicare Facility and Conditions of Participation

To qualify as an IRF for Medicare payment, facilities must meet the Medicare IRF classification criteria.

  1. The first criterion is that providers must meet Medicare conditions of participation for acute care hospitals. They must also:
  2. Supply a preadmission screening to determine that each prospective patient is likely to benefit significantly from an intensive inpatient rehabilitation program;]
  3. Provide patients with close medical supervision and provide rehabilitation nursing, physical therapy, and occupational therapy, and, as needed, speech-language pathology and psychological (including neuropsychological) services, social services, and orthotic and prosthetic devices.
  4. Maintain a medical director of rehabilitation with training and experience in rehabilitation. The medical director must provide services in the facility on a full-time basis for freestanding IRFs, or for a minimum of 20 hours per week for hospital-based IRF units.
  5. Ensure that a coordinated interdisciplinary team is used, that is led by a rehabilitation physician. This must include a team composed of a rehabilitation nurse, a social worker or case manager, and licensed therapist from each therapy discipline involved in the patient’s treatment
  6. The compliance threshold requires that no less than 60 percent of all patients admitted to an IRF have as a primary diagnosis or comorbidity at least 1 of 13 conditions specified by CMS.[iii] The intent of the compliance threshold is to distinguish IRFs from acute care hospitals. If an IRF does not meet the compliance threshold, Medicare pays for all its cases based on the inpatient hospital prospective payment system rather than the IRF PPS (Prospective Payment System).

IRF Quality Measures

MedPac tracks measures of inpatient rehabilitation facility quality. These are:

  1. risk-adjusted facility discharge to the community,
  2. risk-adjusted discharge to skilled nursing facilities (SNFs), and
  3. potentially avoidable readmissions to acute care hospitals.
  4. measures of change in patients’ motor function and cognition during their IRF stay

Long-term Acute Care Hospital vs. IRFs

Long-term Acute Care Hospital serves patients who still need a high level of complex care. The LTACH serves patients who do not need to stay in the hospital in the intensive care unit (ICU) or emergency treatment because they have been stabilized or are stable but still require. See Medicare coverage determinations for specifics.

Examples of patients who need LTACH are complex wound or burn care, severe brain injuries, respiratory therapy, or ventilator weaning. Patients who need intravenous medications or fluids or receive their nutrition through a feeding tube require an LTACH.

Coverage rules are complex; see Medicare Coverage Determinations for details.

Skilled Nursing Facility (SNFs) vs. IRFs

A skilled nursing facility may be indicated for patients who need assistance with managing daily needs. These may include getting dressed, and bathed, and using the toilet. SNFs provide specific medical care in response to health conditions, injuries, and procedures. SNFs provide continuing care for patients who are recovering from heart attacks or shock, hip or femur fractures or surgeries, joint replacements, sepsis, and kidney, and urinary infections.

For Medicare coverage into a skilled nursing facility, a Medicare beneficiary must commit to receiving one- and one-half hours of therapy per day.

Coverage rules are complex; see Medicare Coverage Determinations for details.

[i] Vertebroplasty is a procedure in which a special cement is injected into a fractured vertebra — with the goal of relieving your spinal pain and restoring your mobility. Not all people with fractured vertebrae are candidates for the procedure, however.

[ii] Kyphoplasty is a vertebral augmentation surgery to treat fractures in the vertebra. These fractures may occur because of conditions such as osteoporosis or trauma. Vertebroplasty is a similar technique. Both procedures involve injecting acrylic bone cement into the fracture through a hole in the skin.

[iii] The 13 conditions are stroke; spinal cord injury; congenital deformity; amputation; major multiple trauma; hip fracture; brain injury; neurological disorders (e.g., multiple sclerosis and Parkinson’s disease); burns; three arthritis conditions for which appropriate, aggressive, and sustained outpatient therapy has failed; and hip or knee replacement when bilateral, the patient’s body mass index is greater than or equal to 50, or the patient is age 85 or older.

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Michael F. Arrigo

Michael Arrigo, an expert witness, and healthcare executive, brings four decades of experience in the software, financial services, and healthcare industries. In 2000, Mr. Arrigo founded No World Borders, a healthcare data, regulations, and economics firm with clients in the pharmaceutical, medical device, hospital, surgical center, physician group, diagnostic imaging, genetic testing, health I.T., and health insurance markets. His expertise spans the federal health programs Medicare and Medicaid and private insurance. He advises Medicare Advantage Organizations that provide health insurance under Part C of the Medicare Act. Mr. Arrigo serves as an expert witness regarding medical coding and billing, fraud damages, and electronic health record software for the U.S. Department of Justice. He has valued well over $1 billion in medical billings in personal injury liens, malpractice, and insurance fraud cases. The U.S. Court of Appeals considered Mr. Arrigo's opinion regarding loss amounts, vacating, and remanding sentencing in a fraud case. Mr. Arrigo provides expertise in the Medicare Secondary Payer Act, Medicare LCDs, anti-trust litigation, medical intellectual property and trade secrets, HIPAA privacy, health care electronic claim data Standards, physician compensation, Anti-Kickback Statute, Stark law, the Affordable Care Act, False Claims Act, and the ARRA HITECH Act. Arrigo advises investors on merger and acquisition (M&A) diligence in the healthcare industry on transactions cumulatively valued at over $1 billion. Mr. Arrigo spent over ten years in Silicon Valley software firms in roles from Product Manager to CEO. He was product manager for a leading-edge database technology joint venture that became commercialized as Microsoft SQL Server, Vice President of Marketing for a software company when it grew from under $2 million in revenue to a $50 million acquisition by a company now merged into Cincom Systems, hired by private equity investors to serve as Vice President of Marketing for a secure email software company until its acquisition and multi $million investor exit by a company now merged into Axway Software S.A. (Euronext: AXW.PA), and CEO of one of the first cloud-based billing software companies, licensing its technology to Citrix Systems (NASDAQ: CTXS). Later, before entering the healthcare industry, he joined Fortune 500 company Fidelity National Financial (NYSE: FNF) as a Vice President, overseeing eCommerce solutions for the mortgage banking industry. While serving as a Vice President at Fortune 500 company First American Financial (NYSE: FAF), he oversaw eCommerce and regulatory compliance technology initiatives for the top ten mortgage banks and led the Sarbanes Oxley Act Section 302 internal controls I.T. audit for the company, supporting Section 404 of the Sarbanes Oxley Act. Mr. Arrigo earned his Bachelor of Science in Business Administration from the University of Southern California. Before that, he studied computer science, statistics, and economics at the University of California, Irvine. His post-graduate studies include biomedical ethics at Harvard Medical School, biomedical informatics at Stanford Medical School, blockchain and crypto-economics at the Massachusetts Institute of Technology, and training as a Certified Professional Medical Auditor (CPMA). Mr. Arrigo is qualified to serve as a director due to his experience in healthcare data, regulations, and economics, his leadership roles in software and financial services public companies, and his healthcare M&A diligence and public company regulatory experience. Mr. Arrigo is quoted in The Wall Street Journal, Fortune Magazine, Kaiser Health News, Consumer Affairs, National Public Radio (NPR), NBC News Houston, USA Today / Milwaukee Journal Sentinel, Medical Economics, Capitol ForumThe Daily Beast, the Lund Report, Inside Higher Ed, New England Psychologist, and other press and media outlets. He authored a peer-reviewed article regarding clinical documentation quality to support accurate medical coding, billing, and good patient care, published by Healthcare Financial Management Association (HFMA) and published in Healthcare I.T. News. Mr. Arrigo serves as a member of the board of directors of a publicly traded company in the healthcare and data analytics industry, where his duties include: member, audit committee; chair, compensation committee; member, special committee.

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