skip to Main Content

Inpatient Rehabilitation & the Presidents Compared Budget on PAC

Written by: Mediware on Tuesday, February 3, 2015 Posted in: Inpatient Rehab

The 75% Rule is Beyond Compare – It Doesn’t Make Sense

In 2011, the then proposed President’s Budget stated that returning IRFs to the 75% Rule regulations would reduce the budget by $2.6 billion. The present proposal alters this expectation to a reduced $2.23 billion. Why the difference? In 2011, The President’s proposed budget discussed post-acute care and recommended changes to IRF practice and payment and the flood gates opened for keeping specialty IRF services in-check; and I blogged about those recommendations.  As you can see by the table below, when IRFs were moved from the 75% Rule to the present 60% Rule (stepped process after 2006); the volume of cases had declined in utilization for IRF. Defending medical necessity and limiting access to more acute type patients increased overall costs for those served by an IRF. Let’s not be mistaken though, volume and utilization DEFINITELY has NOT grown, yet IRFs continue to be targeted as though over utilization could possibly be occurring. The budget proposal seems misdirected with ‘savings’ proposed that just don’t add up.  (The table below is from the CMS Office of Actuary and published in a MedPAC report).


Annually as expected, a new proposed Presidential budget is released and speculations of savings for post- acute care continues to be a common string in the management and tightening of future costs incurred by those that need a specialized level of rehabilitation. An IRF/U is a type of rehabilitation that requires medical and functional oversight at a level of care not mandated nor comensurate with a SNF level of care. Despite already limited access to IRF care, a proposal to re-adopt a validation of specialty care called ‘75% Rule’, has surfaced as a cost saver.

In hindsight, growth and access to IRFs has remained flat to negative after MOVING FROM the 75% Rule because of present federally mandated rules/regulations. This proposal only increases inadequate CHOICE for the Medicare beneficiary at the expense of meeting an arbitrary legal percent guideline. As you can see by the table, 9.1, volume has not grown. The limited, more acute type patients that access IRFs in order  to meet medical necessity is more the driver of cost.

If it’s all about ‘money’, then this budget certainly fails a consistency argument for savings between the predictions of budget 2011 and present. A 75% Rule reinstatement would reduce access to an appropriate level of care for those in need of increased medical/functional oversight at a cost to the beneficiary that reduces choice in selecting the appropriate level of services based soley on a percent that must be maintained by that facility. Raising the rule percentage also endangers facility closure for those that would lose IRF PPS ‘excluded’ status.

Without any changes except the proposal year,  you can see the prediction budgets below, specific to moving back to the 75% Rule (‘appropriate use’), to be far different from 2011 to the 2016 predictions. What possibly could swing savings expectations to this degree for all else being equal? Using the rehabilitation 13 diagnoses rather than the original defined ‘rehab 10′ diagnoses for presumption would certainly limit access, but is that in the beneficiaries’ best interest? Not when savings predictions do not line up!


Seeing that answers are in ‘millions’, we can add 6 zeros onto the end and begin to discuss if  there is truly correlation at all. With the IRF industry being less than 3 percent of the overall healthcare picture with short lengths of stays and excellent outcomes, how can further rationing of appropriate level of care be tolerated in the budget? After all, IRF PPS pays based on burden of care acuity and resources determined in the first three days of admission.

The picture above is rather small so let’s compare prediction differences for the SAME years and same policy proposal costs if the 75% Rule was re-enacted to maintain Medicare IRF PPS beds. In each year, the savings now is less than that predicted in the 2011 budget. The question of whether it is plausible may have more to do with decreased ability to access the correct level of care. It would further dip in the volume of beneficiary access to a medically supervised rehabilitation program for those in need.

Proposed savings in millions comparing 2011 to 2016 Presidential Budget predictions:

     FY Prediction                2011 Budget                 2016 Budget  

  • 2016                           200                                  170
  • 2017                           300                                  200
  • 2018                           300                                  210
  • 2019                           400                                  210
  • 2020                           400                                  220
  • 2021                           500                                  230

Have the realities and discussions from rehabilitation agencies and advocacy groups led to less lofty expectations? Though rehabilitation facilities have not increased volume of patients, remaining relatively flat, providing care specifically to higher acuity patients, these predictions remain inconsistent. This PAC budget proposal, specific to the 75% Rule, seems a bit misdirected and should be removed. Instead, full utilization to the 60% Rule enabling patients who can tolerate and benefit from a rehabilitation level of care with the required physician/nursing oversight must remain the guide to utilization.

The ability to utilize all levels of possible CMG’s within the Medicare annual CMI/payment table rather than high-end acuity-driven CMG’s,  would be  more cost effective and outcomes oriented. Allowing access by patient choice for those that need higher medical oversight would lead to overall reduced average payment to IRFs because each patient would be directed to the correct level of care rather than an arbitrary cut-off in teetering on or over the 75% Rule. Would you like to be the medically complex patient that doesn’t fit the rule on any given day and, therefore, declined access to a level of care not fitting to your circumstances? If every person were to ask that question of themselves, the 75% argument would quickly disappear.

Once again, IRF expenditures do not appear to be the problem in this government provided chart.


Advocate with facts to your congressional leaders. The savings advocated through return to the 75% Rule for admission is NOT a game of numbers. Volume access to care per table 9.1 and 8.2 above has shown that the 60% Rule with the now 13 conditions vs. 10 has done enough to reduce access. Let’s start paying attention to beneficiary CHOICE and the cost of OUTCOMES and savings in real budget talks!

Let the IMPACT ACT of 2014 guide assessment, outcomes and comparability before we hastily change specialized rehabilitation access or presume savings where clearly the target is misdirected.

Back to top