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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 is Managing Partner & CEO of No World Borders, a leading healthcare management and IT consulting firm. He serves as an expert witness in Federal and State Court and was recently ruled as an expert by a 9th Circuit Federal Judge. He serves as a patent expert witness on intellectual property disputes, both as a Technical Expert and a Damages expert. His vision for the firm is to continue acquisition of skills and technology that support the intersection of clinical data and administrative health data where the eligibility for medically necessary care is determined. He leads a team that provides litigation consulting as well as advisory regarding medical coding, medical billing, medical bill review and HIPAA Privacy and Security best practices for healthcare clients, Meaningful Use of Electronic Health Records. He advises legal teams as an expert witness in HIPAA Privacy and Security, medical coding and billing and usual and customary cost of care, the Affordable Care Act and benefits enrollment, white collar crime, False Claims Act, Anti-Kickback, Stark Law, physician compensation, Insurance bad faith, payor-provider disputes, ERISA plan-third-party administrator disputes, third-party liability, and the Medicare Secondary Payer Act (MSPA) MMSEA Section 111 reporting. He uses these skills in disputes regarding the valuation of pharmaceuticals and drug costs and in the review and audit of pain management and opioid prescribers under state Standards and the Controlled Substances Act. He consults to venture capital and private equity firms on mHealth, Cloud Computing in Healthcare, and Software as a Service. He advises ERISA self-insured employers on cost of care and regulations. Arrigo was recently retained by the U.S. Department of Justice (DOJ) regarding a significant false claims act investigation. He has provided opinions on over $1 billion in health care claims and due diligence on over $8 billion in healthcare mergers and acquisitions. Education: UC Irvine - Economics and Computer Science, University of Southern California - Business, studies at Stanford Medical School - Biomedical Informatics, studies at Harvard Medical School - Bioethics. Trained in over 10 medical specialties in medical billing and coding. Trained by U.S. Patent and Trademark Office (USPTO) and PTAB Judges on patent statutes, rules and case law (as a non-attorney to better advise clients on Technical and Damages aspects of patent construction and claims). Mr. Arrigo has been interviewed quoted in the Wall Street Journal, New York Times, and National Public Radio, Fortune, KNX 1070 Radio, Kaiser Health News, NBC Television News, The Capitol Forum and other media outlets. See and for more about the company.

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