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IRFs Struggle to Meet Medical Necessity Requirements

Written by: Mediware on Tuesday, August 9, 2016 Posted in: Acute Care Rehab, Inpatient Rehab

It’s no secret that inpatient rehab facilities (IRF) are required to demonstrate compliance with a high level of regulatory oversight. From MACs to RACs to the OIG and others, IRFs operate under tremendous scrutiny. And the stakes for this scrutiny is high – generally, it means denial in full of the claims (which can exceed $36,000 per patient).

One might think that, with such scrutiny and the potential for negative outcomes, IRFs would be masters of meeting those requirements. Unfortunately, the data suggests otherwise.

Surveying the results of one MAC’s probes and targeted audits tells a very different story. Noridian, a Medicare Administrative Contractor (MAC) responsible for most of the western United States has published the results of several audits, and the results don’t look very promising.

594 claims; 163 denied in full (plus some partial denials and corrections equals an overall error rate of 49%)
100 claims; 76 denied in full (overall error rate 75%)
100 claims; 70 denied in full (overall error rate 75%)
319 claims; 56 denied in full (overall error rate 33%)
100 claims; 52 denied in full (overall error rate 52%)
100 claims; 29 denied in full (overall error rate 30%)

No industry sets out with a goal of generating a 30%-75% error rate, especially when it means that the revenue associated with the activity is denied. This data shows, in excruciating highlight, the need for continuous improvement in meeting the defined requirements for inpatient rehabilitative services.

Many of the reasons for failure were common across the audits. These include:

• Pre-admission screening was not completed and/or reviewed by qualified staff within 48 hours prior to the IRF admission
• Medical necessity requirements for admission were not met
• Post-admission physician evaluation was not completed by qualified staff within 24 hours after the IRF admission
• Rehabilitation physician did not complete the minimum requirements for the individualized overall plan of care within four days of the IRF admission
• Interdisciplinary team conference requirements for attendees and/or frequency were not met
• Minimum therapy intensity requirements were not met
• IRF-PAI (patient assessment instrument) was not documented for validation of claim coding

IRFs need tools that help them meet the requirements set out as a condition of participation by Medicare. The rules are complex and demanding, and the price of failure is high. Any organization that accepts this level of audit denial is headed for a very difficult time when the audit eye is turned toward them.

Time will not cure this issue. We’ve had years of these same regulatory expectations, and yet the error rates remain high. IRFs must confront the root causes of this type of failure and make bold changes to improve their outcomes. Without systemic change, we can only expect the same results we’ve been getting for the last several years.


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