Proposed Changes to Inpatient Rehabilitation Facility 60 Percent Rule Draws Industry Criticism but MedPAC Support

July 19, 2013

The Centers for Medicare & Medicaid Services (CMS) recently published a Proposed Rule for federal fiscal year 2014 that, if implemented, would revise the list of ICD-9 diagnosis codes used to determine presumptive compliance under the Inpatient Rehabilitation Facility (IRF) “60 percent rule.” The 60 percent rule requires that at least 60 percent of an IRF’s inpatient population meet at least one of 13 enumerated medical conditions. The “Presumptive Method,” which surveys a variety of ICD-9 diagnosis codes an IRF submits to CMS, is one method used to determine IRF compliance with the 60 percent rule. Under the Proposed Rule, CMS explained that after reviewing ICD-9 codes in preparation for ICD-10 implementation, CMS determined that certain ICD-9-CM codes currently included on the presumptive methodology list do not necessarily demonstrate a patient’s meeting the requirements for inclusion in a facility’s 60 percent compliance threshold, and should therefore be removed from the list. Industry and Medicare Payment Advisory Commission (MedPAC) reactions to the proposal were markedly different.

Industry Reactions

Overall industry reaction has been critical of the Proposed Rule as creating unnecessary barriers to patient care and failing to understand the realities of assigning diagnosis codes to patients in need of IRF services. The American Medical Rehabilitation Providers Association (AMRPA) vehemently objects to CMS’s proposal to eliminate certain codes, arguing, among other reasons, that the proposal establishes a dangerous, and possibly unlawful, precedent under which there are few checks on CMS to delete additional codes or limit qualifying conditions in the future. AMRPA expressed concern that the agency could delete from the presumptive methodology all the codes for additional, longstanding conditions that were specifically included in the law by Congress.

The Federation of American Hospitals (FAH) also warned that if the coding proposals in the Proposed Rule are adopted, many hospitals could alter their admission practices, resulting in the diversion of resources away from direct patient care and heightening the risk of IRF declassification. Further, the American Hospital Association (AHA) objected to the Proposed Rule’s “blanket approach” of deleting certain ICD-9 codes from the presumptive methodology as being wholly inappropriate, and expressed concern that the change would reduce access to IRF services for patients who would otherwise meet IRF admission criteria.

MedPAC Reaction

MedPAC, which is responsible for providing recommendations to Congress on Medicare payment policy, supported the Proposed Rule. MedPAC agreed with CMS’s goal to improve accuracy in determining the need for intensive rehabilitation services and by requiring more detailed coding. MedPAC argued CMS could differentiate IRF patients from patients with similar conditions being treated in less-costly settings. MedPAC said the ideal payment system would be focused on patient-based criteria for a particular episode of care, but acknowledged that in the context of the current fee-for-service system, this ideal was not presently possible, therefore the Proposed Rule was a positive step in the context of the current payment system.

If you have questions regarding the 60 percent rule or the Proposed Rule, please contact one of the authors below or another member of the McGuireWoods healthcare group.