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IRFs Under Review for “Reasonable and Necessary” Requirement

The Centers for Medicare & Medicaid Services (“CMS”) recently announced a review of Inpatient Rehabilitation Facilities (“IRFs”) that will focus on the “reasonable and necessary” requirement that IRFs are required to meet. An IRF provides rehabilitation services to patients who have suffered an injury, illness, or surgery that has left them in need of intensive rehabilitation.  Services provided by IRFs include physical therapy, occupational therapy, rehabilitative nursing, speech-language pathology, and the procurement of prosthetic and orthotic devices.

IRF services are considered “reasonable and necessary” if: (1) the patient requires therapeutic intervention in multiple therapy disciplines, (2) the patient actively participates in and benefits from the therapy program, (3) the patient is sufficiently stable at the onset of the program, (4) the patient is supervised by a physician, (5) the patient’s chart has the correct documentation within it, and (6) the patient requires an interdisciplinary team approach to care and the team has weekly meetings.

IRFs are not meant to be used as an alternative to a full course of treatment.  Patients who are still completing their treatment in the hospital and cannot fully participate in intensive rehabilitation therapy will not have their IRF service determined to be reasonable or necessary. Furthermore, IRF is not appropriate for patients who have finished their hospital treatment and no longer need intensive rehabilitation.

As background, the Medicare Fee for Service Recovery Audit Program is responsible for identifying and correcting improper Medicare payments. CMS contracts with Recovery Audit Contractors (“RACs”) to review claims post-payment. Each month, CMS updates the proposed and approved topics for RACs to review.

Initially, the “complex medical review” of IRFs was proposed on the CMS website: “0A024-Inpatient Rehabilitation Facility (IRF) Stays: Meeting Requirements”. On September 11, 2018, the proposal was moved to the approved topics list, “0106-Inpatient Rehabilitation Facility (IRF) Stays: Meeting Requirements to be considered Reasonable and Necessary.” Specifically, inpatient hospital services furnished to a patient in an inpatient rehabilitation facility will be reviewed for medical necessity.   The approved topic will impact RAC regions 1-4 in all states. Region 1’s RAC is Performant Recovery, Inc., region 2 and 3’s RAC is Cotiviti, LLC, and region 4’s RAC is HMS Federal Solutions.

IRFs in these regions should therefore brace for Additional Documentation Requests (“ADRs”) by RACs.  An ADR is a letter sent to the IRF when they have been selected for review and additional documentation and/or medical records are needed to complete the claim. Proper documentation within a patient’s medical record is a commonly overlooked area. If documentation does not meet CMS’s standards, the RACs will deem the service not medically reasonable and necessary. Thus, IRFs should focus on ensuring that their documentation complies with CMS’s standards to establish medical necessity.

Although none of the RACs have posted anything on their websites regarding the review of IRFs, IRFs should monitor their RAC’s website for additional details about these reviews. Wachler & Associates can assist IRFs in setting up procedures that will minimize errors in documentation while waiting for the review process to begin.

If you or your healthcare entity has any questions about the RAC reviews, whether you are at risk for audit, or any other related questions, please contact an experienced healthcare attorney at (248) 544-0888, or via email at You may also subscribe to our health law blog by adding your email at the top right of this page.

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