[Federal Register Volume 70, Number 121 (Friday, June 24, 2005)]
[Notices]
[Pages 36640-36641]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-12593]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-1480-N]
RIN 0938-AN92


Medicare Program; Inpatient Rehabilitation Facility Compliance 
Criteria

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Notice.

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SUMMARY: In accordance with the provisions of the Consolidated 
Appropriations Act of 2005, this notice announces the Secretary's 
determination that the requirements for classification as an inpatient 
rehabilitation facility (IRF) specified in Sec.  412.23(b)(2) are not 
inconsistent with a report that the Government Accountability Office 
(GAO) issued concerning classification of a facility as an IRF.

DATES: Effective Date: This notice is effective on June 24, 2005.

FOR FURTHER INFORMATION CONTACT: Pete Diaz, (410) 786-1235.

SUPPLEMENTARY INFORMATION:

I. Background

A. Classification as an Inpatient Rehabilitation Facility Under Sec.  
412.23(b)(2)

    Sections 1886(d)(1)(B) and 1886(d)(1)(B)(ii) of the Social Security 
Act (the Act) give the Secretary the discretion to define a 
rehabilitation hospital and unit. A freestanding rehabilitation 
hospital and a rehabilitation unit of an acute care hospital are 
collectively referred to as an inpatient rehabilitation facility (IRF), 
and are paid under the IRF prospective payment system (PPS). Under the 
current regulations at 42 CFR 412.1(b)(2), a hospital or unit of a 
hospital, must first be deemed excluded from the diagnosis-related 
group (DRG)-based inpatient prospective payment system (IPPS) to be 
paid under the IRF PPS. A facility must meet the applicable 
requirements in subpart B of part 412. Secondly, the excluded hospital 
or unit of the hospital must meet the conditions for payment under the 
IRF PPS at Sec.  412.604. See Sec.  412.23(b). Moreover, a provider, 
among other requirements, must be in compliance with the criteria 
specified in Sec.  412.23(b)(2) in order to be classified as an IRF, 
see Sec.  412.604(b).
    On May 7, 2004, we published a final rule in the Federal Register 
(69 FR 25752) that responded to public comments on the September 9, 
2003 proposed rule (68 FR 26786), and revised the criteria for being 
classified as an IRF including the criteria at Sec.  412.23(b)(2). The 
changes in the final rule were effective for cost reporting periods 
beginning on or after July 1, 2004. Under Sec.  412.23(b)(2), a 
specific percentage, noted below, of an IRF's total inpatient 
population must meet at least one of the following medical conditions:
    (1) Stroke.
    (2) Spinal cord injury.
    (3) Congenital deformity.
    (4) Amputation.
    (5) Major multiple trauma.
    (6) Fracture of femur (hip fracture).
    (7) Brain injury.
    (8) Neurological disorders, including multiple sclerosis, motor 
neuron diseases, polyneuropathy, muscular dystrophy, and Parkinson's 
disease.
    (9) Burns.
    (10) Active, polyarticular rheumatoid arthritis, psoriatic 
arthritis, and seronegative arthropathies resulting in significant 
functional impairment of ambulation and other activities of daily 
living that have not improved after an appropriate, aggressive, and 
sustained course of outpatient therapy services or services in other 
less intensive rehabilitation settings immediately preceding the 
inpatient rehabilitation admission or that result from a systemic 
disease activation immediately before admission, but have the potential 
to improve with more intensive rehabilitation.
    (11) Systemic vasculidities with joint inflammation, resulting in 
significant functional impairment of ambulation and other activities of 
daily living that have not improved after an appropriate, aggressive, 
and sustained course of outpatient therapy services or services in 
other less intensive rehabilitation settings immediately preceding the 
inpatient rehabilitation admission or that result from a systemic 
disease activation immediately before admission, but have the potential 
to improve with more intensive rehabilitation.
    (12) Severe or advanced osteoarthritis (osteoarthrosis or 
degenerative joint disease) involving two or more major weight bearing 
joints (elbow, shoulders, hips, or knees, but not counting a joint with 
a prosthesis) with joint deformity and substantial loss of range of 
motion, atrophy of muscles surrounding the joint, significant 
functional impairment of ambulation and other activities of daily 
living that have not improved after the patient has participated in an 
appropriate, aggressive, and sustained course of outpatient therapy 
services or services in other less intensive rehabilitation settings 
immediately preceding the inpatient rehabilitation admission but have 
the potential to improve with more intensive rehabilitation. (A joint 
replaced by a prosthesis no longer is considered to have 
osteoarthritis, or other arthritis, even though this condition was the 
reason for the joint replacement.)
    (13) Knee or hip joint replacement, or both, during an acute 
hospitalization immediately preceding the inpatient rehabilitation stay 
and also meets one or more of the following specific criteria:
    (i) The patient underwent bilateral knee or bilateral hip joint 
replacement surgery during the acute hospital admission immediately 
preceding the IRF admission.
    (ii) The patient is extremely obese with a Body Mass Index of at 
least 50 at the time of admission to the IRF.
    (iii) The patient is age 85 or older at the time of admission to 
the IRF.
    The percentage of an IRF's inpatient population that must meet at 
least one of the above medical conditions is determined by the IRF's 
cost reporting period. The following are the percentages of an IRF's 
inpatient population that must meet at least one of the medical 
conditions specified above:
    For cost reporting periods beginning on or after July 1, 2004, and 
before July 1, 2005, the compliance threshold will be 50 percent of the 
IRF's total inpatient population.
    For cost reporting periods beginning on or after July 1, 2005, and 
before July 1, 2006, the compliance threshold will be 60 percent of the 
IRF's total inpatient population.
    For cost reporting periods beginning on or after July 1, 2006 and 
before July 1, 2007, the compliance threshold will be 65 percent of the 
IRF's total inpatient population. Furthermore, for those cost reporting 
periods beginning before July 1, 2007, the regulations also permit 
certain comorbidities, as defined in Sec.  412.602, to be counted 
towards the applicable inpatient population percentage, if certain 
requirements are met as specified in Sec.  412.23(b)(2)(i). For cost 
reporting periods beginning on or after July 1, 2007, patient 
comorbidity as described in Sec.  412.23(b)(2)(i) is not included in 
the inpatient population that counts toward the compliance threshold 
percentage.
    For cost reporting periods beginning on or after July 1, 2007, the 
compliance

[[Page 36641]]

threshold will be 75 percent of the IRF's total inpatient population.

B. Verification of Compliance With Sec.  412.23(b)(2)

    The fiscal intermediaries (FIs) determine if an IRF met the 
requirements specified in Sec.  412.23(b)(2). In order to provide 
guidance to the FIs regarding how they should determine compliance with 
Sec.  412.23(b)(2), we issued Program Transmittal 221 on June 25, 2004. 
In order to clarify the instructions in Program Transmittal 221, we 
issued Program Transmittal 347 on October 29, 2004, and Program 
Transmittal 478 on February 18, 2005.
    In accordance with the instructions in the above-noted Program 
Transmittals, the FI reports an IRF's compliance percentage to the 
appropriate CMS Regional Office (RO). If the IRF did not meet the 
compliance percentage threshold, then the RO terminates the facility's 
classification as an IRF and notifies the FI and the facility of this 
action. The facility would then be paid as an acute care hospital under 
the IPPS if the facility met the requirements to be paid under the 
IPPS. In the case of the termination of the classification of a 
critical access hospital (CAH) rehabilitation distinct part unit (DPU) 
as an IRF, the DPU may be paid in accordance with the payment system 
Medicare uses to pay CAHs, but only if such payment to the DPU does not 
violate any of Medicare's CAH regulations or operational policies.

C. Effect of the Consolidated Appropriations Act of 2005

    Section 219 of the Consolidated Appropriations Act of 2005 (Pub. L. 
108-447), enacted on December 8, 2004, specifies that if a facility was 
classified as an IRF as of June 30, 2004, we could not change the 
classification of the facility and treat it as an acute care hospital 
to be paid under the IPPS until the Secretary either: (1) Determined 
that the requirements specified in Sec.  412.23(b)(2) are not 
inconsistent with a report that the Government Accountability Office 
(GAO) would issue concerning the clinically appropriate standard for 
the IRF classification criteria under Sec.  412.23(b)(2); or (2) In 
accordance with the provisions of that GAO report, we issue an interim 
final rule revising the classification criteria specified in Sec.  
412.23(b)(2). Accordingly, under the Consolidated Appropriations Act of 
2005, we have not changed the classification of facilities classified 
as IRFs as of June 30, 2004 on the basis of any non-compliance with 
Sec.  412.23(b)(2), but we continued to have the FIs perform their 
classification compliance reviews.

D. The GAO Report

    In April 2005 the GAO issued its report and recommended the 
following:
     We should ensure that FIs routinely conduct targeted 
reviews for medical necessity for IRF admissions.
     We should conduct additional activities to encourage 
research on the effectiveness of intensive inpatient rehabilitation and 
the factors that predict patient need for intensive inpatient 
rehabilitation.
     We should use the information obtained from reviews for 
medical necessity, research activities, and other sources to refine the 
rule to describe more thoroughly the subgroups of patients within a 
condition that are appropriate for IRFs rather than other settings, and 
may consider using other factors in the descriptions, such as 
functional status.
    We share GAO's view that it would be beneficial to obtain 
information from the reviews for medical necessity, research 
activities, and other sources to describe subgroups of patients within 
a condition in order to better delineate which patients can most 
appropriately be treated in an IRF and those that can be more 
appropriately cared for in other settings. To obtain this information, 
we have expanded our efforts to provide greater oversight of IRF 
admissions through a number of Local Coverage Decisions that are now in 
effect or in advance stages of development. In addition, we are 
actively encouraging government clinical research organizations, 
academic institutions, and industry rehabilitation groups to conduct 
both general and targeted research that would inform all interested 
parties regarding the types of patients that would most benefit from 
intensive inpatient rehabilitation. We also requested that the National 
Institute of Health (NIH) convene a research panel to recommend future 
research regarding the types of patients that would most benefit from 
intensive inpatient rehabilitation. The agency is currently evaluating 
the recommendations of this panel. The recommendations will be used to 
guide research that will help determine which facility and patient 
factors may be considered to classify a facility as an IRF. We will 
collaborate with NIH to determine how best to promote this research.

E. Results of CMS' Review of the GAO Recommendations

    Medicare covers rehabilitation care in a variety of settings, 
including the home, skilled nursing facilities, outpatient facilities, 
hospitals and IRFs. We are committed to ensuring that beneficiaries 
have access to high quality rehabilitation services in the most 
appropriate setting. Medicare's payments to IRFs are made at a level 
commensurate with the type of intensive inpatient rehabilitation 
services these facilities are intended to provide. Consequently, 
Medicare maintains the compliance criteria and other policies to ensure 
its higher payments to IRFs are appropriately directed to this more 
intense level of service. We believe the regulations as revised in the 
May 7, 2004 final rule reflect the need for Medicare payments to be 
appropriately directed towards those beneficiaries who require 
intensive rehabilitation.

II. Provisions of the Notice

    After careful consideration, the Secretary has determined that the 
recommendations in the GAO's IRF report are not inconsistent with our 
regulations as revised in the May 7, 2004 final rule. Therefore, we 
will immediately enforce the procedures specified in Program 
Transmittals 221, 347, and 478, as well as any additional Program 
Transmittals or instructions that we may issue if the facility does not 
meet the requirements specified in Sec.  412.23(b)(2).

    Authority: Section 1886(j) of the Social Security Act (42 U.S.C. 
1395ww(j)).

(Catalog of Federal Domestic Assistance Program No. 93.773 
Medicare--Hospital Insurance Program; and No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: April 17, 2005.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: June 10, 2005.
Michael O. Leavitt,
Secretary.
[FR Doc. 05-12593 Filed 6-21-05; 4:07 pm]
BILLING CODE 4120-01-P