IRF: Voluntary Appeals Settlement

on Tuesday, 09 July 2019. All News Items | Case Management | Documentation | Coding

The What, When, Why, Where, Who and What Now of the Proposed Settlement

What and When

CMS announced a new Appeals Settlement Initiative for Inpatient Rehabilitation Facilities (IRFs) on June 17th. They are accepting Expressions of Interest (EOIs) for a settlement option targeted towards IRF appeals that were filed with the Medicare Administrative Contractor (MAC) for redetermination no later than August 31, 2018, and are currently pending or are eligible for further appeal.

Why Now?

In a related FAQ document available for download on the CMS website, CMS notes they are “implementing this new settlement option…as part of its commitment to reduce the number of appeals pending in the administrative appeals process.” According to the Office of Medicare Hearings and Appeals (OMHA) website, the average processing time for an appeal has increased from 94.9 days in FY 2009 to just over 1,321 days in the 2nd Quarter of FY 2019.         

Where to find information?

The CMS website has a dedicated IRF Appeals Initiative webpage. Downloads currently available on this site includes the following:

  • Expression of Interest,
  • Agreement template,
  • External Process Flow Diagram,
  • Eligibility Determination Request Instructions,
  • External FAQs,
  • Payment Spreadsheet template; and
  • Fact Sheet.

Who is focused on IRF Audits?

Supplemental Medical Review Contractor

In year one of their contract, the former Supplemental Medical Review Contractor, Strategic Health Solutions, LLC performed a review of IRF services for calendar year claims 2010, 2011 and 2012. The error rate was 90% and the overall top reason of claims denials cited in the report was “the submitted documentation not containing all of the required elements within the preadmission screening and post-admission evaluations.”

Office of Inspector General

In September 2018 the Office of Inspector General (OIG) released the report Many Inpatient Rehabilitation Facility Stays Did Not Meet Medicare Coverage and Documentation Requirements. One reason the OIG cited for performing this review was the Comprehensive Error Rate Testing (CERT) program found the error rates for IRFs increased, ranging from 9 percent in 2012 to a high of 62 percent in 2016.

The review included claims for services provided in 2013 and covered $6.75 billion in Medicare payments to 1,139 IRFs nation-wide for 370,872 claims. They reviewed a stratified random sample of 220 claims totaling almost $11.3 million in payments to 164 IRFs. The OIG found 175 of the 220 claims did not support that IRF care was reasonable and necessary in accordance with Medicare’s requirements. Based on the findings, they estimated that Medicare paid IRFs nation-wide $5.7 billion for care to beneficiaries that was not reasonable and necessary.

Federal Government Payment

The website indicates that “the government can achieve the greatest return on investment for the taxpayer by ensuring that improper payments are mitigated in the highest-risk programs, otherwise known as “high-priority programs.”  

There are currently two Medicare Fee-for-Service Scorecards available on this webpage (2019 Q2 and 2018 Q4). IRFs is the current Medicare Fee-for-Service focus. The 2019 Q2 scorecard has the following goal and accomplishment:

  • Quarterly Progress Goal: HHS will continue to educate IRF providers through the Targeted Probe and Educate (TPO) process in order to reduce the error rate.
  • Recent Accomplishment: In Q4 FY 2018, HHS approved the Medicare FFS Recovery Audit Contractor’s request to review IRF claims.

What You Need to Know

While RAC issue 0073-Inpatient Rehabilitation Facility (IRF) Stays: Meeting Requirements to be considered Reasonable and Necessary is posted on the CMS RAC webpage as an approved complex review for all states, to date, no RAC has added this issue to their list of current reviews.

Resources cited in the Strategic Health Solutions, LLC for providers to ensure documentation supports the medical necessity of services provided includes the following:

Section 1833(e) of the Social Security Act

Section 1862(a)(1)(A) of the Social Security Act

Code of Federal Regulations (CFR), Title 42, Volume 3, Part 424 Conditions for Medicare Payment, 424.5(a)(6) Basic Conditions

42 CFR §412.622(a)(4) – Documentation at Time of Admission

42 CFR §412.622(a)(5) – IDT Approach to Care

42 CFR §412.622(a)(3) – Inpatient Rehabilitation Facility (IRF) Coverage Criteria

Centers for Medicare and Medicaid Services (CMS) Internet-Only Manuals (IOM), Pub. 100-02 Benefit Policy Manual, Chapter 15, §220.1.2 Plans of Care for Outpatient Physical Therapy, Occupational Therapy, or Speech-Language Pathology Services

CMS IOM Pub, 100-02 Benefit Policy Manual, Chapter 1 § 110.2.5 – Interdisciplinary Team (IDT) Approach to the Delivery of Care

CMS IOM Pub, 100-02 Benefit Policy Manual, Chapter 1 §110.1.4 – Required Admission Orders

CMS IOM Pub, 100-02 Benefit Policy Manual, Chapter 1 §110.1.1 – Required Preadmission Screening

CMS IOM Pub, 100-02 Benefit Policy Manual, Chapter 1 §110.1.2 – Required Post-Admission Physician Evaluation

CMS IOM Pub, 100-02 Benefit Policy Manual, Chapter 1 §110.1.3 – Required Individualized Overall Plan of Care

Now, is the time for IRFs to decide if they will submit an Expression of Interest in the Settlement option and to ensure their medical records include documentation supporting the requirements for IRFs.

Article by Beth Cobb

Beth Cobb, RN, BSN, ACM, CCDS, is the Manager of Clinical Analytics at Medical Management Plus, Inc.  Beth has over twenty-five years of experience in healthcare including eleven years in Case Management at a large multi-facility health system. 

In her current position, Beth is a principle writer for MMP’s Wednesday@One weekly e-newsletter, an active member of our HIPAA Compliance Committee, MMP’s Education Department Program Director and co-developer of MMP’s proprietary Compliance Risk Assessment (CRA) Tool. You may contact Beth at This email address is being protected from spambots. You need JavaScript enabled to view it..

This material was compiled to share information.  MMP, Inc. is not offering legal advice.  Every reasonable effort has been taken to ensure the information is accurate and useful.

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