Inpatient Rehabilitation Admissions Go Under the Microscope…in One State

Inpatient Rehabilitation Admissions Go Under the Microscope…in One State

With little fanfare, last week the Centers for Medicare & Medicaid Services (CMS) announced another Review Choice Demonstration Project. Joining the ongoing Review Choice Demonstration for Home Health Services Project, CMS will require every admission to an Inpatient Rehabilitation Facility (IRF) in the state of Alabama to be reviewed, starting in July. Despite the name suggesting that IRFs have a choice about participation, this will be mandatory, but each IRF will have the choice to have their admissions reviewed either prior to payment or on a post-payment basis.

CMS is also doubling down on the choice concept; if an IRF “demonstrates compliance with Medicare rules” during the first six months of audits, they will have the choice of continuing with 100-percent claim review, either pre- or post-payment, or selecting to have a random selection of their admissions audited pre-payment.

This is not the first time CMS has announced such a program. In September 2021, CMS proposed the same project to start in 2022, with mandatory participation by IRFs in four states: Alabama, California, Pennsylvania, and Texas. In response to that proposal, the American Hospital Association (AHA) sent an extensive comment to CMS, addressing their displeasure with CMS starting a new program in the midst of the COVID-19 public health emergency (PHE). As they pointed out, the PHE waivers included some that affected IRFs, including the ability to accept patients who could not tolerate three hours of therapy per day.

In addition, the AHA was extremely critical of the past performance of government auditors that reviewed IRF admissions in previous audits. As the AHA said, “IRF audits by the OIG (U.S. Department of Health and Human Services Office of Inspector General) have used problematic practices, such as inappropriately second-guessing the admitting physician’s judgment, relying on post-admission evidence, citing high function in one or two activities of daily living while ignoring others, or ignoring other evidence in the medical record.”

Those readers who deal with audits are all too familiar with the inappropriate practice used by auditors of looking at unexpected events after admission or the outcome of the hospital stay as a reason to deny the admission, despite the fact that the admitting physician could not possibly know what events would occur after admission.

In October 2018, OIG released a report on 200 IRF admissions that claimed that over 70 percent of those IRF admissions were improper, and suggested that IRFs were overpaid $5.7 billion nationwide. This once again drew a fiery response from the AHA. When the results of this audit were discussed on social media recently with a prominent physiatrist, this audit was characterized not as an audit, but rather as “a witch hunt by the government.” It is commonly known, and confirmed via a Freedom of Information Act (FOIA) response from the OIG, that these audits are performed by Maximus, a private company that contracts with CMS to act in many capacities, including as the Qualified Independent Contractor (QIC) and the independent reviewer for Medicare Advantage (MA) denials. Previous audit findings by Maximus, including reviews of hospice admissions, have led many organizations to call into question the capabilities of their staff to properly interpret Medicare regulations.

With the end of the COVID-19 PHE waivers, it appears that this project will proceed in Alabama. Why CMS chose to proceed only in one state, Alabama, which had 9,262 IRF admissions in 2022, and not in California (19,773 admissions), Pennsylvania (20,814 admissions), or Texas (63,568) (yes, that number is correct, and raises questions that cannot be addressed), is not known.

Perhaps CMS decided that they did not want to burden a Medicare Administrative Contractor (MAC) with an overwhelming number of cases, or perhaps it was as simple as CMS picking the first one alphabetically. It also remains to be seen who at the MACs will be reviewing the admissions to avoid a repeat of the 2018 OIG audit, with findings that appeared to many to ignore the federal rules.

But what is clear is that every IRF, whether in Alabama or in any other state, should once again review their processes to ensure that patients are not only appropriately screened and selected, but that documentation clearly indicates that the Medicare criteria for admission are met.

Program note: Listen to Dr. Ronald Hirsch live when he makes his Monday rounds on Monitor Mondays, Mondays at 10 Eastern with Chuck Buck.


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