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Written by: Mediware on Friday, July 5, 2013 Posted in: Inpatient Rehab

If you had to explain IRF classification to anyone and visited the Claims Processing Manual prior to March 18, 2013, you would have found some information in the manual had not been updated to keep in step with annual changes, including the validation criteria for the 60% rule. This MedLearn Matter update is what you have been looking for – MM8127 (corresponds with change request CR8127).

MM8127 updates the ”Medicare Claims Processing Manual,” Chapter 3 (Inpatient Hospital Billing), to clarify key components of Inpatient Rehabilitation Facility (IRF) claims processing. These changes are intended only to clarify the existing policies and there are no system or policy changes.”  Specifically 100-04: Chapter 3; Sections 140.1.2 and 140.1.3 are clarified.

“Medicare IRF Classification Requirements, a facility paid under the IRF Prospective Payment System (PPS) is always subject to verification that it continues to meet the criteria for exclusion from the Inpatient PPS (IPPS). Your FI or MAC provides the Centers for Medicare & Medicaid Services (CMS) Regional Office (RO) with data for determining the classification status of each facility and the RO reviews the IRFs classification status each year.”  Meeting criteria mandates determines whether a facility will remain paid by IRF PPS or as a hospital IPPS payment rule.

This review is done as a 12 month rolling calendar that ends with a period of 4 months prior to the next cost reporting period. This release also updates expectations toward the 60% rule rather than the older Medicare claims processing regulation descriptions. Those led you to believe the 75% rule was the mandated percentage for compliance of rehab 13 diagnoses as a percentage of your entire admission population during the last several years, when in fact it has been held at 60% through the Medicare, Medicaid, SCHIP Extension Act of 2007 (MMSEA). MMSEA permanently reduced the compliance threshold percentage to 60 percent criterion. To obtain this permanent statutory relief, IRFs and Units agreed to fund the fix by freezing to a 0 percent market basket update from April 1, 2008, through the end of Fiscal Year 2009; six full quarters without payment updates for those that recall.  (Be aware this ”permanent relief” is now being threatened in the 2013 proposed presidential budget.)

Other areas covered in this Medlearn Matter release: classification criteria for new IRFs/Units, change in status, new inpatient beds and change in ownership or leasing of beds and mergers.


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